<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
AUGUST 31, 1998 REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT under THE SECURITIES ACT OF 1933
------------------
AGWAY
AGWAY INC. FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS
SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
DELAWARE DELAWARE
(STATE OF INCORPORATION) (STATE OF INCORPORATION)
15-0277720 06-1174232
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
333 BUTTERNUT DRIVE, 1105 NORTH MARKET STREET,
DEWITT, NEW YORK 13214 WILMINGTON, DELAWARE 19801
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
315-449-6431 302-654-8371
DAVID M. HAYES, Esq.
AGWAY INC.
BOX 4933
Syracuse, New York 13221-4933
315-449-6436
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable on or after the effective date of this Registration
Statement.
If the only securities being registered on the Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
----
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. X
---
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement number of the earlier effective registration
statement for the same offering.
---
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
---
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
---
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AGWAY INC.
Guarantee of the Debt Securities........... (1) (1) None
8% Cumulative Preferred Stock, Series B.... 10,000 shs $100 $ 1,000,000 $ 295.00
Series HM Preferred Stock.................. 4,000 shs $ 25 $ 100,000 $ 29.50
Membership Common Stock.................... 4,000 shs $ 25 $ 100,000 $ 29.50
AGWAY FINANCIAL CORPORATION
Guaranteed, Subordinated Member and
Subordinated Money Market Certificates... $ 200,000,000 100% $ 200,000,000 $ 59,000.00
Guaranteed, Subordinated Member and
Subordinated Money Market Certificates
under the Interest Reinvestment Option... $ 45,000,000 100% $ 45,000,000 $ 13,275.00
-----------
$ 72,629.00
===========
</TABLE>
(1) No consideration will be received by Agway Inc. for the Guarantee.
- --------------------------------------------------------------------------------
The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUBJECT TO COMPLETION DATED AUGUST 31, 1998
PROSPECTUS
(logo)
AGWAY INC.
AND
AGWAY FINANCIAL CORPORATION
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Discounts Proceeds to
Title of Class (1) Public or Commissions (2) Companies (3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGWAY INC.
Guarantee of Debt Securities -- None --
8% Cumulative Preferred Stock, Series B
Per Unit $ 100 None $ 100
Total $ 1,000,000 None $ 1,000,000
Series HM Preferred Stock (4)
Per Unit $ 25 None $ 25
Total $ 100,000 None $ 100,000
Membership Common Stock (5)
Per Unit $ 25 None $ 25
Total $ 100,000 None $ 100,000
AGWAY FINANCIAL CORPORATION
Guaranteed, Subordinated Money Market Certificates
(minimums 6.75% and 7.00% per annum) due October 31,
2013 (6)
Per Unit (7) 100% None $ 100/5,000
Total $ 30,000,000 None $ 30,000,000
Guaranteed, Subordinated Member Money Market
Certificates (minimums 7.25% and 7.50% per annum)
due October 31, 2013 (6)
Per Unit (7) 100% None $ 100/5,000
Total $ 80,000,000 None $ 80,000,000
Guaranteed, Subordinated Money Market Certificates
(minimum 7.75% per annum) due October 31, 2004 (6)
Per Unit 100% None $ 2,000
Total $ 40,000,000 None $ 40,000,000
Guaranteed, Subordinated Money Market Certificates
(minimum 8.00% per annum) due October 31, 2006 (6)
Per Unit 100% None $ 2,000
Total $ 50,000,000 None $ 50,000,000
Guaranteed, Subordinated Member and Subordinated Money
Market Certificates under the Interest Reinvestment
Option (ranging from minimum of 4.5% to 9.5% per annum)
due from October 31, 1998 through October 31, 2013
Per Unit 100% None
Total $ 45,000,000 None $ 45,000,000
</TABLE>
- --------------------------------------------------------------------------------
WHILE THE MONEY MARKET CERTIFICATES WILL, AT A MINIMUM, PAY THE STATED
RATE OF INTEREST, A HIGHER RATE MAY BE PAID BASED UPON THE TREASURY BILL RATE.
The Certificates bear interest payable semiannually in arrears on January
1 and July 1 of each year. The Certificates are redeemable at the option of the
Company. A complete description of the securities offered by Agway Financial
Corporation ("AFC") is set forth on pages 10 through 20 herein.
There is no market for any of the offered securities other than that
provided by Agway Inc. (Agway) and AFC (together the "Companies") through their
practice of repurchasing certain outstanding securities whenever registered
holders elect to tender them for repurchase. The Companies do not intend to
follow this practice with respect to the 7.75% and 8.00% Subordinated Money
Market Certificates due October 31, 2004 and 2006 (the "7.75% Certificates" and
the "8.0% Certificates"), respectively, described herein.
The Company may, from time to time prior to the completion of the
offering of the Certificates, change the rate of interest or maturity date
offered by filing a supplement with the Securities and Exchange Commission. Any
change in the interest rate or maturity date offered will not affect the rate of
interest on or maturity date of any Certificates theretofore issued.
FOR A DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, SEE THE "RISK FACTORS" SECTION
OF THIS PROSPECTUS SET FORTH ON PAGE 4.
FOOTNOTES ARE LOCATED ON PAGE 2
THE DATE OF THIS PROSPECTUS IS
1
<PAGE>
FOOTNOTES:
(1) See pages 10 through 20 for a description of the securities being offered
and qualifications of the purchaser.
(2) The securities offered by this Prospectus are being offered by the
Companies through their employees. No commission or other remuneration is
being paid directly or indirectly to such persons in connection with the
offer and sale of the securities.
(3) It is assumed that all securities offered are sold and the amount of
proceeds is before deduction of estimated expenses of $176,700. Because
there is no underwriting of the securities offered, there is no assurance
that all or any part of the indicated proceeds will be received by the
Companies from the offering of the securities.
(4) The Series HM Preferred Stock may be purchased only by former members of
Agway Inc.
(5) The Membership Common Stock may be purchased only by persons entitled to
membership in Agway Inc.
(6) The Certificates issued with minimum purchase amounts of $2,000 and
$5,000 bear interest at a rate equal to the greater of (1) the
Certificates' stated rate and (2) the Treasury Bill Rate, as defined on
page 14. The Certificates issued with minimum purchase amounts of $100
bear interest at a rate equal to the greater of (1) the Certificates'
stated rate and (2) one-half percent (.5%) below the Treasury Bill Rate,
as defined on page 14.
(7) Certificates with the same maturity date bearing lower interest rates
will be issued in minimum denominations of $100, while Certificates
bearing a higher interest rate will be issued in minimum denominations of
$5,000.
(8) The Certificates are unsecured obligations of the Company and
subordinated to all Senior Debt (as defined herein) of the Company. As of
August 26, 1998, Senior Debt of $19,150,000 was outstanding. See
"Description of the Certificates - Subordination Provisions."
----------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS; ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANIES. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, ANY SECURITIES OTHER THAN
THE SECURITIES COVERED BY THIS PROSPECTUS; NOR DOES IT CONSTITUTE AN OFFER TO
SELL, IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE COMPANIES TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANIES SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
Agway is a cooperative association as defined in the Agricultural Marketing Act
of 1929 and as such is exempt from certain registration, proxy and insider
trading provisions of the Securities Exchange Act of 1934. AFC is a wholly owned
subsidiary of Agway. All holders of Membership Common Stock and/or securities
receive an Annual Report in November of each year which contains the information
called for by Rule 14A-3(b). A Prospectus is also sent in January of each year
to all holders of securities who have elected the interest reinvestment option.
The Annual Report contains financial information that has been audited and
reported upon, with an opinion expressed by certified public accountants. Other
holders of securities may obtain an Annual Report or Prospectus upon request
from: Patricia Edwards, Assistant Secretary, P. O. Box 4761, Syracuse, New York
13221; Telephone: 315-449-6311. Agway shall file with the Securities and
Exchange Commission supplementary and periodic information, documents and
reports required of issuers under Sections 13(a) and 15(d) of the Securities
Exchange Act of 1934. Reports and other information filed with the Commission
can be inspected and copied at the public reference facilities of the SEC,
Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549 as well as the
following Regional Offices: 7 World Trade Center, Suite 1300, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661-2511. Copies of such materials can be obtained by mail from the Commission
at prescribed rates. Requests should be directed to the SEC's Public Reference
Section. The Securities and Exchange Commission also maintains a web site which
contains information regarding registrants who file electronically, the "EDGAR"
data base. The web site address for the EDGAR data base is
http://www.sec.gov/edgarhp.htm. In addition, materials may be inspected or
obtained at 333 Butternut Drive, DeWitt, New York 13214 (P. O. Box 4933,
Syracuse, New York, 13221; Telephone: 315-449-6436).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Companies hereby incorporate by reference into this Prospectus the Annual
Report of Agway on Form 10-K filed on August 27, 1998, for the fiscal year ended
June 30, 1998, pursuant to Section 13 of the Securities Exchange Act of 1934
(File Number 2-22791). In exemptive relief granted pursuant to a "no action
letter" by the staff of the Securities and Exchange Commission, AFC, as a
separate company, is not required to file periodic reports with respect to these
debt securities but does report summarized AFC financial information in Agway's
financial statement footnotes.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - CONTINUED
All reports and other documents filed by Agway pursuant to Sections 13(a),
13(c), 14 and 15(d) of the 1934 Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Certificates hereunder shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of the filing of such reports and documents. To the extent a statement
or information included in any document incorporated by reference is superseded
or modified by a statement or information included in any subsequent documents
incorporated by reference, the statement or information so superseded or
modified shall not constitute a part of this Prospectus.
The Companies will provide a copy of any of the foregoing documents incorporated
herein by reference (other than exhibits to such documents), without charge to
each person to whom a copy of this Prospectus is delivered, upon the written or
oral request of any such person to: Patricia Edwards, Assistant Secretary, P. O.
Box 4761, Syracuse, New York 13221, Telephone: 315-449-6311.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Companies ............................................................. 3
Risk Factors .............................................................. 4
Selected Financial Data and Ratio of Margins .............................. 7
Use of Proceeds ........................................................... 9
Description of Securities to be Registered ................................ 10
Legal Opinion ............................................................. 21
Experts ................................................................... 21
Distribution and Redemption of Securities Offered ......................... 21
Absence of Public Market, Redemption and Market Risk ...................... 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE COMPANIES
Agway Inc., incorporated under the Delaware General Corporation Law in 1964 and
headquartered at 333 Butternut Drive, DeWitt, New York, 13214 (Telephone Number
315-449-6431), is an agricultural cooperative directly engaged in manufacturing,
processing, distribution and marketing of products and services for its
farmer-members and other customers principally in twelve northeastern states.
AFC, a wholly owned subsidiary of Agway, is a Delaware corporation incorporated
in 1986 with principal executive offices at 1105 North Market Street,
Wilmington, Delaware 19801 (Telephone Number 302-654-8371). AFC's business
activities consist primarily of securing financing through bank borrowings and
issuance of corporate debt instruments to provide funds to its sole stockholder,
Agway, and AFC's wholly owned subsidiary, Agway Holdings, Inc. (AHI) and its
subsidiaries, for general corporate purposes. The payment of principal and
interest on bank borrowings and on the debt securities offered by this
Prospectus is guaranteed by Agway. This guarantee is full and unconditional, and
joint and several. AFC, through certain subsidiaries of AHI, is involved in
retail and wholesale sales of farm supplies, yard and garden products, pet food
and pet supplies; the distribution of petroleum products; repackaging and
marketing of produce; processing and marketing sunflower seeds; the underwriting
and sale of certain types of property and casualty insurance; the sale of health
insurance; and lease financing.
3
<PAGE>
RISK FACTORS
SUBORDINATION. The Money Market Certificates (the "Certificates") offered by
this Prospectus are unsecured obligations of the Company and are subordinated to
all Senior Debt (as defined in "Description of the Certificates - Subordination
Provisions") of the Company. Therefore, in the event of bankruptcy, liquidation
or reorganization of the Company, its assets will be available to pay
obligations under the Certificates only after all Senior Debt has been paid in
full, and there may not be sufficient assets remaining to pay amounts due on any
or all of the Certificates then outstanding. As of August 26, 1998, Senior Debt
of $19,150,000 was outstanding. See "Description of the Certificates -
Subordination Provisions."
LIMITATIONS ON TRANSFER. The Series HM Preferred Stock, the Membership Common
Stock, the 7.25% Member Certificates and the 7.50% Member Certificates may not
be transferred, except in certain very limited circumstances. The Series HM
Preferred Stock and the Membership Common Stock may not be transferred other
than to Agway, except with Agway's written consent endorsed on the relevant
certificate. Pursuant to its By-laws, Agway will permit transfers of such stock
only to persons who were Agway members. See "Description of Honorary Member
Preferred Stock, Series HM Limitations on Ownership and Transfer" and
"Description of Membership Common Stock - Limitations on Ownership and
Transfer." The 7.25% and 7.50% Member Certificates may not be transferred,
except by will or operation of law. The 6.75%, 7.00%, 7.75% and 8.00%
Certificates are freely transferable. See "Description of Certificates -
Limitations on Ownership and Transfer."
ABSENCE OF PUBLIC MARKET, REDEMPTION AND MARKET RISK. As noted above, there are
substantial restrictions on the transfer of the Membership Common Stock, Series
HM Preferred Stock and the Member Certificates. With respect to Certificates
that are freely transferable, there is no market for such Certificates and there
is no intention on the part of the Companies to create or encourage a trading
mechanism for those Certificates. The Companies do not intend to apply for a
listing of the Certificates on any securities exchange. The secondary market
for, and the market value of, the Certificates will be affected by a number of
factors independent of the creditworthiness of Agway and AFC, including the
level and direction of interest rates, the remaining period to maturity of the
Certificates, the right of the Companies to redeem the Certificates, the right
of the Company to issue Certificates at interest rates higher than the rates for
Certificates previously issued, the aggregate principal amount of the
Certificates and the availability of comparable investments. In addition, the
market value of the Certificates may be affected by numerous other interrelated
factors, including factors that affect the U.S. corporate debt market generally
and Agway and AFC specifically. There is no assurance that in the event of
redemption the investor will be able to reinvest the proceeds in comparable
securities at an effective interest rate as high as that of the Certificates.
Certificate holders should rely solely on the Companies' ability to repay
principal at maturity of the offered Certificates as the source for liquidity in
this investment. See "Description of Certificates - Interest Rates," "Redemption
Provisions" and "Repurchase Practice."
MARKET PRICE OF AND DIVIDENDS ON AGWAY'S EQUITY. The incidents of ownership of
Agway's Membership Common Stock and Series HM Preferred Stock differ
considerably from those of common stock and preferred stock ownership in a
typical business corporation. The Membership Common Stock may be purchased only
by persons entitled to membership in the Company. Only farmers and cooperative
organizations of farmers who purchase farm supplies or services or market farm
products through Agway may be members. Series HM Preferred Stock can only be
purchased by former Agway members. By reason of the fact that Agway is an
agricultural cooperative, its Membership Common Stock primarily serves the
purpose of evidencing membership in Agway (or, in the case of Series HM
Preferred Stock, former membership) rather than of evidencing an equity interest
in Agway. The equity claim of Membership Common stockholders and Series HM
Preferred stockholders to the assets of Agway is measured by, and restricted to,
the $25 par value of the share, plus dividends declared and unpaid, if any, for
the current year. See "Description of Membership Common Stock" and "Description
of Honorary Member Preferred Stock, Series HM."
NO UNDERWRITING; NO MINIMUM. The offering of securities hereunder is not being
underwritten, there is no assurance that all or any of the securities offered
hereby will be sold, and there is no minimum amount of securities which must be
sold as a condition to the sale of the securities hereunder. In the event that
all or a significant portion of the securities offered hereby are not sold, the
Company would use alternative financing already in place to repay maturing
securities and may secure additional alternative sources of financing, if
needed. If the Company deems it necessary to secure additional alternative
financing, there can be no assurance that it will be able to do so or that it
will be able to do so on terms that are similar to or as favorable as those of
the securities offered hereby.
4
<PAGE>
RISK FACTORS (CONTINUED)
AGRICULTURAL ECONOMY AND OTHER FACTORS. The financial condition of the Company
can be directly affected by factors affecting the agricultural economy, since
these factors impact the demand for the Company's products and the ability of
its customers to make payments for products already purchased through credit
extended by the Company. These factors include: (i) changes in government
agricultural programs (e.g., milk marketing orders and acreage reduction
programs) that may adversely affect the level of income of customers of the
Company; (ii) weather-related conditions which periodically occur that can
impact the agricultural productivity and income of the customers of the Company;
and (iii) the relationship of demand relative to supply of agricultural
commodities produced by customers of the Company. The Company can also be
affected by major international events, like the downturn in the Asian economy,
which can affect such things as the price of commodities the Company uses in its
operations as well as the general level of interest rates.
Federal agricultural legislation, formally known as The Federal Agriculture
Improvement and Reform Act of 1996, was signed into law on April 4, 1996. This
legislation replaced the former program of variable price-linked deficiency
payments with fixed payments to farmers which decline over a seven-year period.
This legislation also eliminated federal planting restrictions and acreage
controls allowing farmers more flexibility to plant for the market. The impact
of this legislation on the agricultural economy, and on the financial condition
of the Company, is not expected to be significant in the short-term. The
longer-term impact on the financial condition of the Company of such a major
change in the federal government's role in agriculture cannot be predicted at
this time.
The Company's energy business is impacted by factors such as weather conditions
in the Northeast and the relationship of supply and demand for petroleum
products worldwide as well as within Agway's market. Agway's retail and
insurance businesses can be impacted by weather conditions as well as from
fluctuations in the economy in the northeastern United States that, in general,
affect consumer demand for products. To the extent that these factors adversely
affect the customers of the Company, the financial condition of the Company
could be adversely affected.
COMMODITY PRICE RISK. The Company has exposure to adverse price fluctuations
associated with certain commodity inventories, product gross margins and certain
anticipated transactions in its Agriculture and Energy segments. Commodities
such as corn, soy complex, oats, wheat, gasoline, fuel oil, and propane are
purchased at market prices which are subject to volatility. In order to manage
the risk of market price fluctuations, the Company enters into various
exchange-traded futures and option contracts and over-the-counter option
contracts with third parties. The Company closely monitors and manages its
exposure to market price risk on a daily basis in accordance with formal
policies established for this activity. However, due to the volatility of the
commodities market, the Company may experience losses (as well as gains) from
the use of such contracts during the year. Any losses (or gains) from the use of
such contracts may or may not be realized at the same level in future years.
INTEREST RATE RISK. Telmark, the Company's leasing business, endeavors to limit
the effects of changes in interest rates by matching as closely as possible, on
an ongoing basis, the maturity and repricing characteristics of funds borrowed
to finance its lease activities with the maturity and repricing characteristics
of its lease portfolio. However, a rise in interest rate would increase the cost
of that portion of debt which is not precisely matched to the characteristics of
the portfolio and could lower the value of outstanding leases in the secondary
market. In addition, higher interest rates, inasmuch as they would increase the
cost of funds borrowed by the Company, would also increase the cost of leases
and could decrease demand for leases.
ENVIRONMENTAL ISSUES. The Company is subject to a number of governmental
regulations concerning environmental matters, either directly or as a result of
the operations of its subsidiaries. The Company expects that it will be required
to expend funds to participate in the remediation of certain sites, including
sites where the Company has been designated by the Environmental Protection
Agency (EPA) as a potentially responsible party (PRP) under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) and sites with
underground fuel storage tanks, and will incur other expenses associated with
environmental compliance.
5
<PAGE>
RISK FACTORS (CONTINUED)
ENVIRONMENTAL ISSUES (CONTINUED)
At June 30, 1998, the Company has been designated as a PRP under CERCLA or as a
third party to the original PRPs in several Superfund sites. The liability under
CERCLA is joint and several, meaning that the Company could be required to pay
in excess of its pro rata share of remediation costs. The Company's
understanding of the financial strength of other PRPs at these Superfund sites
has been considered, where appropriate, in the Company's determination of its
estimated liability.
The Company continually monitors its operations with respect to potential
environmental issues, including changes in legally mandated standards and
remediation technologies. Agway's recorded liability reflects those specific
issues where remediation activities are currently deemed to be probable and
where the cost of remediation is estimable. Estimates of the extent of the
Company's degree of responsibility of a particular site and the method and
ultimate cost of remediation require a number of assumptions for which the
ultimate outcome may differ from current estimates; however, the Company
believes that its past experience provides a reasonable basis for estimating its
liability. As additional information becomes available, estimates are adjusted
as necessary. While the Company does not anticipate that any such adjustment
would be material to its financial statements, it is reasonably possible that
the result of ongoing and/or future environmental studies or other factors could
alter this expectation and require the recording of additional liabilities. The
extent or amount of such events, if any, cannot be estimated at this time.
YEAR 2000. The approach of the year 2000 presents potential issues to all
organizations who use computers in the conduct of their business or depend on
business partners who use computers. To the extent computer use is
date-sensitive, hardware or software that recognizes the year by the last two
digits may erroneously recognize "00" as 1900 rather than 2000, which could
result in errors or system failures. Agway utilizes a number of computers and
computer software (systems) in the conduct of its business. Many systems are for
specific business segments and others have broader corporate-wide use. Systems
are principally involved in the flow of information rather than in the
processing, manufacturing, and distributing operations.
The Company has completed significant assessments in its major business
operations, continues to assess all of these areas, and has developed or, in
some cases, is in the process of developing the implementation plans to address
the issues identified. The Company anticipates that solutions to all year 2000
areas above will be implemented and tested no later than December 1999.
The Company engaged an international consulting firm in March 1998 to evaluate
the Company's approach to year 2000 plans and implementation compared to
industry "best practices." Based on this review, the Company has increased the
involvement of higher-level management to assure a focus on the implementation
timetable and the development of specific contingency plans, and has initiated
development of a more comprehensive enterprise-wide testing environment to be in
place by December 1998.
The year 2000 compliance issue is an uncertainty that is continuously being
monitored as the Company implements its plans. Based on the work performed to
date, the Company presently believes that the likelihood of the year 2000 having
a material effect on the results of operations, liquidity, or financial
condition is remote. Notwithstanding the foregoing, it is not presently clear
that all parts of the country's infrastructure, including such things as the
national banking systems, electrical power, transportation of goods,
communications, and governmental activities, will be fully functioning as the
year 2000 approaches. To the extent failure occurs in such activities, which are
outside the Company's control, it could affect the Company's sources of supply
and the Company's ability to service its customers with the same degree of
effectiveness with which they are served presently. The Company is identifying
elements of the infrastructure that are of greater significance to its
operations, obtaining information on an ongoing basis as to their expected year
2000 readiness, and determining alternative solutions if required.
See Management's Discussion and Analysis of Financial Condition and Results of
Operations (Item 7) and Quantitative and Qualitative Disclosures about Market
Risk (Item 7a) in Agway Inc.'s most recently filed Form 10-K.
6
<PAGE>
SELECTED FINANCIAL DATA OF AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
AND RATIO OF MARGINS (EARNINGS)
(Thousands of Dollars Except Per Share and Ratio Amounts)
The following Selected Financial Data of the Company and Consolidated
Subsidiaries has been derived from consolidated financial statements audited by
PricewaterhouseCoopers LLP, whose report for the years ended June 30, 1998, 1997
and 1996 is included in the Annual Report on Form 10-K, and should be read in
conjunction with the full consolidated financial statements of the Company and
Notes thereto.
<TABLE>
<CAPTION>
(In Thousands of Dollars Except Per Share Amounts)
--------------------------------------------------------------------
Years Ended June 30
--------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales and revenues (1).. $ 1,562,943 $ 1,671,714 $ 1,663,085 $ 1,592,857 $ 1,695,129
Margin (loss) from
continuing operations (2) $ 12,798 $ 10,670 $ 11,147 $ (7,800) $ 555
Net margin (loss)(2)(3)(4) . $ 41,754 $ 10,670 $ 12,662 $ (15,730) $ (3,445)
Total assets(1) ............ $ 1,418,231 $ 1,300,261 $ 1,245,891 $ 1,225,193 $ 1,273,958
Total long-term debt ....... $ 354,529 $ 330,371 $ 291,666 $ 268,310 $ 253,104
Total long-term subordinated
debt .................... $ 462,196 $ 438,127 $ 414,927 $ 399,064 $ 407,144
Cash dividends per share
of common stock ......... $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50
</TABLE>
(1) Certain amounts reported in fiscal years ended June 30, 1994-1997, have been
reclassified to conform to the current year presentation.
(2) The 1994 data reflects a $6,065 credit before taxes from business
restructuring; 1995 data reflects a credit before taxes from business
restructuring of $3,248; and 1996 data reflects a $1,943 credit before taxes
from business restructuring.
(3) The 1994 data reflects an after-tax operating loss of $4,000 from
discontinued operations; 1995 data reflects an after-tax loss of $12,360 in
discontinued operations related to Hood and an after-tax gain on the sale of
Curtice Burns of $4,430; and 1996 data reflects an after-tax gain on the
sale of Hood of $1,515, net of operating losses until the time of sale.
(4) Effective July 1, 1997, the Company changed its method of determining the
market-related value of its plan assets under Statement of Financial
Accounting Standards (SFAS) No. 87, "Accounting for Pensions." A cumulative
effect adjustment, net of tax, of $28,956 increased net margin in 1998.
7
<PAGE>
SELECTED FINANCIAL DATA OF AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
AND RATIO OF MARGINS (EARNINGS)
(Thousands of Dollars Except Per Share and Ratio Amounts)
RATIO OF MARGINS (EARNINGS)
For purposes of this ratio, margins from continuing operations represent margins
before (i) income taxes and discontinued operations and (ii) fixed charges and
preferred dividend requirements. Fixed charges include interest on debt and the
interest factor of rent. The pro-forma ratio of adjusted margins to fixed
charges and adjusted margins to fixed charges and preferred dividends combined,
of Agway Inc. (parent) as of June 30, 1998, after giving effect to the issuance
of the Certificates offered hereby, would be 2.6 and 2.1, respectively.
June 30,
----------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Ratio of adjusted margins to fixed charges:
Agway Inc. and Consolidated Subsidiaries 1.3 1.2 1.3 * 1.1
=== === === === ===
Agway Inc.(1) 3.1 1.4 3.8 1.6 *
=== === === === ===
Ratio of adjusted margins to fixed charges
and preferred dividends combined:
Agway Inc. and Consolidated Subsidiaries 1.2 1.1 1.2 * *
=== === === === ===
Agway Inc.(1) 2.4 1.2 2.5 2.0 *
=== === === === ===
*Adjusted net margin is inadequate to cover fixed charges or fixed charges and
preferred dividends combined. See below for amount deficient.
<TABLE>
<CAPTION>
June 30,
------------------------------------------------
1998 1997 1996 1995 1994
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Deficiency of adjusted net margins to
total fixed charges:
Agway Inc. and Consolidated Subsidiaries N/D N/D N/D $ 6,053 N/D
======= ======== ======= ======= =======
Agway Inc. (1) N/D N/D N/D N/D $17,330
======= ======== ======= ======= =======
Deficiency of adjusted net margins to
total fixed charges and preferred
dividends combined:
Agway Inc. and Consolidated Subsidiaries N/D N/D N/D $12,599 $31,530
======= ======== ======= ======= =======
Agway Inc. (1) N/D N/D N/D N/D $19,619
======= ======== ======= ======= =======
</TABLE>
(1) Parent-company ratios are presented since all of AFC's debt is
guaranteed by Agway Inc. This guarantee is full and unconditional, and
joint and several.
N/D No deficiency.
8
<PAGE>
USE OF PROCEEDS
There is no underwriting of the securities offered; thus, there is no assurance
that all or any of the proceeds will be received. The net proceeds of the sale
of the offered securities will be no greater than $245,000,000. The funds
received will be applied by the Companies approximately in the relative order
that follows:
<TABLE>
<CAPTION>
AGWAY AFC TOTAL %
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
Offering expenses $ 1,000 $ 175,700 $ 176,700 .07
Repurchase of outstanding securities 2,500,000 99,600,000 102,100,000 41.67
Redemption of short- and long-term debt 0 142,723,300 142,723,300 58.26
------------ ------------ ------------ ---------
$ 2,501,000 $242,499,000 $245,000,000 100.0%
============ ============ ============ =========
</TABLE>
Although the exact amount is presently indeterminable, it is anticipated,
assuming that all securities hereby offered are sold, that approximately
$102,100,000 of the proceeds of this offering will be used for the repurchase of
outstanding securities, which is a continuation of a practice of providing a
market for the securities by repurchasing such securities (at par value in the
case of preferred and common stock, and at the principal plus accrued interest
in the case of debentures and money market certificates) as the holders (members
or other investors) elect to tender the securities for repurchase. Proceeds from
the offering pending its actual use will be used to pay down short-term debt. As
of August 26, 1998, the range of interest rates and maturities of short-term
debt that will be paid down was 5.54% - 5.56% and August 28, 1998 September 2,
1998, respectively. The practice of repurchasing securities will not be followed
with respect to the 7.75% Certificates and 8.00% Certificates described herein.
To the extent proceeds are available, the amounts of each type of security
estimated to be repurchased within the next year are as follows:
Money Market Certificates $ 98,400,000
Subordinated Debentures 1,200,000
Preferred Stock 2,400,000
Common Stock 100,000
------------
$102,100,000
============
As of August 26, 1998, approximately $77,400,000 of the above money market
certificates, at rates of 6.50%-9.00%, mature on October 31, 1998. Because the
remaining securities estimated to be repurchased are those presented by the
holders, the Companies cannot determine at this time the interest rates or
maturities of the debt securities which may be repurchased. However, as
described in detail under the heading "Description of the Interest Reinvestment
Option" on page 19, the possible range of interest rates and maturities is 4.5%
- - 9.5% and 1998 - 2013, respectively. If the proceeds of this offering are not
sufficient to provide funds for the repurchase of all securities tendered for
repurchase, Agway intends to utilize available cash from other sources for
additional repurchases. Long-term debt which may be paid consists of capital
leases and non-compete payments.
9
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED
AGWAY INC.
DESCRIPTION OF 8% CUMULATIVE PREFERRED STOCK, SERIES B ($100 PAR VALUE)
Agway is authorized to issue 250,000 shares of 8% cumulative preferred stock,
Series B, having a par value of $100 per share (the "Series B Preferred Stock").
As of August 26, 1998, 235,780 shares of Series B Preferred Stock, with total
par value of $23,578,000, were outstanding. The following summary of the Series
B Preferred Stock is subject in all respects to the provisions of the amended
Certificate of Incorporation and By-laws of Agway, which are incorporated by
reference to this Registration Statement. The exhibits incorporated by reference
thereto may be obtained from the Commission or from Agway in the same manner as
the documents described under "Available Information" on page 2 of this
Prospectus.
DIVIDEND RIGHTS. The holders of shares of Series B Preferred Stock are entitled
to cumulative dividends at the rate of 8% per annum. The 6% Series A Preferred
Stock has priority with respect to the payment of dividends over the Series B
Preferred Stock, 8% cumulative preferred stock, Series B-1 (the "Series B-1
Preferred Stock"), 7% cumulative preferred stock, Series C (the "Series C
Preferred Stock"), and Series HM Preferred Stock (as defined below). There are
no restrictions in any indenture or other agreement respecting the payment of
dividends on cumulative preferred stock.
VOTING RIGHTS. The holders of Series B Preferred Stock are not entitled to vote
for directors, to participate in meetings or management of Agway, or to vote in
any proceedings except in such statutory proceedings as to which their votes are
required by law.
LIQUIDATION RIGHTS. In the event of any distribution of assets in liquidation or
dissolution of Agway, all debts of Agway shall be paid before the holders of any
class or series of preferred stock or common stock are entitled to any
distribution of assets. If assets remain after all debts are paid, the holders
of the Series A Preferred Stock shall receive the full par value thereof,
together with all cumulative dividends declared, accrued, and unpaid to date of
distribution, before any funds shall be distributed to holders of Series B
Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock or Series
HM Preferred Stock. The holders of Series B Preferred Stock, Series B-1
Preferred Stock, Series C Preferred Stock and Series HM Preferred Stock shall
first receive the full par value thereof, together with all cumulative dividends
accrued and unpaid to date of distribution, before any funds shall be
distributed to holders of common stock of Agway, or credited to retained margins
of Agway.
GENERAL. The Series B Preferred Stock has no pre-emptive or conversion rights.
The shares of Series B Preferred Stock will be, when issued, duly authorized,
validly issued and fully paid and non-assessable and the holders thereof will
not be liable for any payment of Agway's debts.
TRANSFER. Shares of Series B Preferred Stock are freely transferable.
REDEMPTION PROVISIONS. The Series B Preferred Stock is subject, at the option of
the Board of Directors, to redemption, as a whole or in part, upon payment of
the par value thereof ($100 per share) with all accrued dividends to the date
fixed for redemption. In case of partial redemption, shares to be redeemed shall
be drawn by lot. There are no restrictions in any indenture or other document
respecting the redemption or purchase of shares by Agway.
REPURCHASE PRACTICE. While there is no guarantee of repurchase, it is the
present practice of Agway to repurchase, at par, the share of any holder of
Series B Preferred Stock when presented for repurchase, and it is the present
intention of Agway to follow such practice in the future.
10
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY INC. - (CONTINUED)
DESCRIPTION OF HONORARY MEMBER PREFERRED STOCK, SERIES HM ($25 PAR VALUE)
Agway is authorized to issue 80,000 shares of Honorary Member preferred stock
having a par value of $25 per share (the "Series HM Preferred Stock"). As of
August 26, 1998, 2,571 shares of Series HM Preferred Stock, with total par value
of $64,275, were outstanding. The summary description of the Series HM Preferred
Stock which follows is subject in all respects to the provisions of the amended
Certificate of Incorporation and By-laws of Agway, which are incorporated by
reference in this Registration Statement.
LIMITATIONS ON OWNERSHIP AND TRANSFER. Series HM Preferred Stock may be issued
only to individuals who have previously held Agway Membership Common Stock. No
more than one share of such stock may be issued to any one person, and Agway,
acting in its capacity as transfer agent, prevents two shares being issued to
the same person. No subscription for this stock will be accepted unless the
subscriber was a member of Agway. Series HM Preferred Stock may not be
transferred other than to Agway except with its written consent endorsed on the
certificate. Pursuant to its Bylaws, Agway will permit transfer of such stock
only to persons who were members in Agway and will limit ownership of the stock
to one share per person.
DIVIDEND RIGHTS. The holders of the Series HM Preferred Stock are entitled to
receive annual dividends, when, as and if declared by the Board of Directors.
Dividends are non-cumulative. There are no restrictions in any indenture or
other agreement respecting the payment of dividends on Series HM Preferred
Stock.
VOTING RIGHTS. The holders of Series HM Preferred Stock have no voting rights.
LIQUIDATION RIGHTS. In the event of any distribution of assets in liquidation or
dissolution of Agway, all debts of Agway shall be paid before the holders of any
class or series of preferred stock or common stock are entitled to any
distribution of assets. If assets remain after all debts are paid, the holders
of the Series HM Preferred Stock would be entitled, subject to the liquidation
rights of the Series A Preferred Stock, Series B Preferred Stock, Series B-1
Preferred Stock and Series C Preferred Stock, to receive only the par value
thereof ($25 per share) plus accrued dividends, if any. Any net assets of Agway
remaining after payment of the par value and accrued dividends on the Series HM
Preferred Stock would be distributed to the holders of the common stock of Agway
and any net assets remaining after the rights of such holders had been satisfied
would be distributed to the members and/or patrons of Agway to whom its retained
margin would be credited.
GENERAL. The Series HM Preferred Stock has no pre-emptive or conversion rights.
The shares of Series HM Preferred Stock will be, when issued, duly authorized,
validly issued and fully paid and non-assessable and the holders thereof will
not be liable for any payment of Agway's debts.
REDEMPTION PROVISIONS. The Series HM Preferred Stock is subject, at the option
of the Board of Directors, to redemption, as a whole or in part, upon payment of
the par value thereof ($25 per share) with all accrued dividends to the date
fixed for redemption. In case of partial redemption, shares to be redeemed shall
be drawn by lot. There are no restrictions in any indenture or other document
respecting the redemption or purchase of shares by Agway.
REPURCHASE PRACTICE. While there is no guarantee of repurchase, it is the
present practice of Agway to repurchase, at par, the share of any holder of
Series HM Preferred Stock when presented for repurchase, and it is the present
intention of Agway to follow such practice in the future.
11
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY INC. - (CONTINUED)
DESCRIPTION OF MEMBERSHIP COMMON STOCK ($25 PAR VALUE)
Agway is authorized to issue 300,000 shares of membership common stock having a
par value of $25 per share (the "Membership Common Stock"). As of August 26,
1998, 102,133 shares of Membership Common Stock (74,592 shares active and 27,541
shares called by the Company but not surrendered by the holder), with total par
value of $2,553,325, were outstanding. The summary description of the Membership
Common Stock which follows is subject in all respects to the provisions of the
amended Certificate of Incorporation and By-laws of Agway, which are
incorporated by reference in this Registration Statement.
LIMITATIONS ON OWNERSHIP AND TRANSFER. Membership Common Stock may be issued
only to persons entitled to membership in Agway. No more than one share of such
stock may be issued to any one person, and Agway, acting in its capacity as
transfer agent, prevents two shares from being issued to the same person either
through new application or transfer. No subscription for Membership Common Stock
will be accepted unless the subscriber is qualified for membership in Agway, as
determined by a local geographic committee applying criteria set forth in
Agway's By-laws. Membership in Agway consists of farmers or cooperative
organizations of farmers who are record holders of one share of Membership
Common Stock of Agway and who purchase farm supplies or farm services or market
farm products through Agway, franchisees, or certain dealers. Membership Common
Stock may not be transferred other than to Agway except with its written consent
endorsed on the certificate. Pursuant to its By-laws, Agway will permit transfer
of such stock only to persons entitled to membership in Agway and will limit
ownership of the stock to one share per person. If any holder of Membership
Common Stock has ceased to be a member of Agway because the member has ceased to
be a farmer, or because the member has done no business with Agway since the
beginning of its preceding fiscal year, such stock held by the member may be
called for repurchase at the par value thereof, plus accrued dividends, if any.
It is the present intention of Agway to call such stock for repurchase under
such circumstances. Stock not being called for repurchase would allow the
continued rights and privileges of membership.
DIVIDEND RIGHTS. The holders of the Membership Common Stock are entitled to
receive annual dividends, when, as and if declared by the Board of Directors, up
to 8% per annum. Dividends are non-cumulative. The holders of preferred stock
are entitled to receive, when, as and if declared by the Board of Directors,
preferential dividends before any dividends shall be declared or paid or set
aside for the Membership Common Stock. Such dividends are cumulative except in
the case of HM Preferred Stock. There are no other restrictions in any indenture
or other agreement respecting the payment of dividends on Membership Common
Stock.
VOTING RIGHTS. The Membership Common Stock carries the exclusive voting rights
of Agway, on the basis of one vote for each share of such stock.
LIQUIDATION RIGHTS. In the event of any liquidation of Agway or other
disposition of its assets, the holders of the Membership Common Stock would be
entitled, after all debts of Agway are paid, subject to the liquidation rights
of the Series A Preferred Stock, the Series B Preferred Stock, the Series B-1
Preferred Stock, the Series C Preferred Stock and the Series HM Preferred Stock
to receive only the par value thereof ($25 per share) plus dividends declared
and unpaid, if any, for the current year. Any net assets of Agway remaining
after payment of the par value and accrued dividends on the Membership Common
Stock would be distributed to the members and/or patrons of Agway to whom its
retained margin would be credited. No person is entitled to any distribution of
assets with respect to the retained margin or otherwise prior to the dissolution
of Agway.
GENERAL. The Membership Common Stock has no pre-emptive or conversion rights.
The shares of Membership Common Stock will be, when issued, duly authorized,
validly issued and fully-paid and non-assessable and the holders thereof will
not be liable for any payment of Agway's debts.
REDEMPTION PROVISIONS. The Membership Common Stock is subject to redemption if
any holder ceases to be a member of Agway.
REPURCHASE PRACTICE. While there is no guarantee of repurchase, it is the
present practice of Agway to repurchase, at par, the share of any holder of
Membership Common Stock when presented for repurchase, and it is the present
intention of Agway to follow such practice in the future.
12
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION
The following are the securities currently being issued by AFC, which are
guaranteed by Agway (such securities being referred to herein as the
"Certificates"). This guarantee is full and unconditional, and joint and
several. AFC may change the minimum rate of interest offered or the maturity
date for Certificates sold after the date of such change by filing a supplement
to this Prospectus with the Securities and Exchange Commission setting forth the
new terms. Any change in the interest rate or maturity date offered will not
affect the rate of interest on or maturity date of any Certificates theretofore
issued. The Certificates include:
o Subordinated Money Market Certificates (minimum 6.75% per annum) due
October 31, 2013(the "6.75% Certificates")
o Subordinated Member Money Market Certificates (minimum 7.25% per annum) due
October 31, 2013 (the "7.25% Member Certificates")
o Subordinated Money Market Certificates (minimum 7.00% per annum) due
October 31, 2013 (the "7.00% Certificates")
o Subordinated Member Money Market Certificates (minimum 7.50% per annum) due
October 31, 2013 (the "7.50% Member Certificates")
o Subordinated Money Market Certificates (minimum 7.75% per annum) due
October 31, 2004 (the "7.75% Certificates")
o Subordinated Money Market Certificates (minimum 8.00% per annum) due
October 31, 2006 (the "8.00% Certificates")
o Subordinated Member and Subordinated Money Market Certificates under the
Interest Reinvestment Option (ranging from minimum of 4.5% to 9.5% per
annum) due from October 31, 1998 through October 31, 2013
13
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION
DESCRIPTION OF THE CERTIFICATES
INTEREST RATES. Interest on the 6.75% Certificates and 7.25% Member
Certificates, issued in $100 denominations, is payable semiannually on January 1
and July 1, and at maturity, at a rate per annum for each semiannual period
equal to the greater of (1) the Certificates' "stated rate" (the "stated rate"
is 6.75% for the 6.75% Certificates and 7.25% for the 7.25% Member
Certificates); and (2) one-half percent (.5%) below the "Treasury Bill Rate" (as
defined below).
Interest on the 7.00% Certificates and 7.50% Member Certificates, issued in
$5,000 denominations, is payable semiannually on January 1 and July 1, and at
maturity, at a rate per annum for each semiannual period equal to the greater of
(1) the Certificates' "stated rate" (the "stated rate" is 7.00% for the 7.00%
Certificates and 7.50% for the 7.50% Member Certificates); and (2) the "Treasury
Bill Rate" (as defined below).
Interest on the 7.75% and 8.00% Certificates, issued in $2,000 denominations, is
payable semiannually on January 1 and July 1, and at maturity, at a rate per
annum for each semiannual period equal to the greater of (1) the Certificates'
"stated rate" (the "stated rate" is 7.75% for the 7.75% Certificates and 8.00%
for the 8.00% Certificates); and (2) the "Treasury Bill Rate" (as defined
below).
U.S. Treasury bills are issued and traded on a discount basis, the amount of the
discount being the difference between their face value at maturity and their
sales price. The per annum discount rate on a U.S. Treasury bill is the
percentage obtained by dividing the amount of the discount on such U.S. Treasury
bill by its face value at maturity and annualizing such percentage on the basis
of a 360-day year. The Federal Reserve Board currently publishes such rates
weekly in its Statistical Release H.15 (519). Unlike the interest on U.S.
Treasury bills, interest on the Certificates will not be exempt from state and
local income taxation.
The "Treasury Bill Rate" for each semiannual interest payment date is the
arithmetic average of the weekly per annum auction average discount rates at
issue date for U.S. Treasury bills with maturities of 26 weeks (which may vary
from the market discount rates for the same weeks), as published for each week
by the Federal Reserve Board, during the period June 1 to November 30,
inclusive, for the January 1 interest payment date or during the period December
1 to May 31, inclusive, for the July 1 interest payment date or during the
period June 1 to September 30 for interest payable on the maturity date (each
such period, an "Interest Determination Period"). In the event that the Federal
Reserve Board does not publish the weekly per annum auction average discount
rate for a particular week, AFC shall select a publication of such rate by any
Federal Reserve Bank or any U.S. Government department or agency to be used in
computing the arithmetic average. The Treasury Bill Rate will be rounded to the
nearest one hundredth of a percentage point.
In the event that AFC in good faith determines that for any reason a Treasury
Bill Rate is not published for a particular week in an Interest Determination
Period with respect to a particular interest payment date or the maturity date,
as applicable, an "Alternate Rate" will be substituted for the Treasury Bill
Rate for such period and date. The Alternate Rate will be the arithmetic average
of the weekly per annum auction average discount rates for those weeks in the
relevant Interest Determination Period for which rates are published as
described above, if any, and the weekly per annum auction average discount rates
or market discount rates or stated interest rates for comparable issue(s) of
securities as is selected by AFC, with the concurrence of the Trustee, for those
weeks in the Interest Determination Period for which no rate is published as
described above. The Alternate Rate will be rounded to the nearest one hundredth
of a percentage point.
In the further event that AFC in good faith determines that neither the Treasury
Bill Rate nor Alternate Rate can be computed for the period June 1 to November
30, inclusive, for the January 1 interest payment date or for the period
December 1 to May 31, inclusive, for the July 1 interest payment date, the rate
of interest payable with respect to any Certificate will be the rate stated
thereon.
The last interest payment date for the Certificates is the date of maturity.
Interest payable on the Certificates at maturity shall be calculated as
described above, during the period June 1 to September 30 in the year of
maturity.
14
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
The following chart sets forth for the periods indicated:
(1) The "Treasury Bill Rate," as defined above.
(2) The highest per annum discount rate on six month U.S. Treasury Bills at one
of the 26 auctions during the period used to calculate the "Treasury Bill
Rate."
(3) The lowest per annum discount rate on six month U.S. Treasury Bills at one
of the 26 auctions during the period used to calculate the "Treasury Bill
Rate."
Payment Average
Date "Treasury Bill Rate" High Low
- -------------------------------------------------------------------------------
Jan.-89 7.33% 8.13% 6.67%
Jul.-89 8.53% 9.12% 8.21%
Jan.-90 7.68% 8.08% 7.35%
Jul.-90 7.70% 8.03% 7.30%
Jan.-91 7.35% 7.75% 6.96%
Jul.-91 6.05% 6.96% 5.61%
Jan.-92 5.32% 5.97% 4.50%
Jul.-92 3.97% 4.39% 3.71%
Jan.-93 3.28% 3.90% 2.78%
Jul.-93 3.13% 3.46% 2.95%
Jan.-94 3.16% 3.30% 3.02%
Jul.-94 3.71% 4.81% 3.14%
Jan.-95 5.04% 5.85% 4.53%
Jul.-95 6.01% 6.42% 5.65%
Jan.-96 5.37% 5.61% 5.22%
Jul.-96 5.01% 5.25% 4.71%
Jan.-97 5.20% 5.38% 5.07%
Jul.-97 5.18% 5.45% 4.97%
Jan. 98 5.13% 5.26% 5.01%
Jul. 98 5.11% 5.30% 4.91%
If the Certificates currently being offered had been outstanding on July 1,
1998, the stated interest rates would have been paid. Although the period June
1, 1998 to November 30, 1998, is not complete as of the date of this Prospectus
(and hence the Treasury Bill Rate for the January 1, 1999 interest payment date
cannot yet be determined), the average Treasury Bill Rate as of August 26, 1998
was 5.05%.
The six-month U.S. Treasury Bill Rate has fluctuated widely during the periods
shown in the chart. This rate can be expected to fluctuate in the future and may
vary beyond the ranges set forth in the above chart. These fluctuations will
cause the rate of interest payable on the Certificates issued in $5,000 and
$2,000 denominations to exceed the stated rate whenever the Treasury Bill Rate
exceeds the stated rate. Interest payable on the Certificates issued in $100
denominations will exceed the stated rate when the Treasury Bill Rate exceeds
the stated rate by more than one-half percent (.5%).
15
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
GENERAL. On November 24, 1997, The Chase Manhattan Bank assumed Trustee
responsibilities from Mellon Bank. F.S.B. pursuant to the purchase of the
corporate trust business of Mellon Bank. Prior to the purchase, Mellon Bank,
F.S.B. assumed Trustee responsibilities from Key Bank of New York pursuant to an
Agreement of Resignation, Appointment and Acceptance dated September 3, 1996 by
and among KeyCorp, Key Bank of New York, Agway Financial Corporation and Mellon
Bank. AFC is authorized to issue the Certificates pursuant to the indenture
dated as of August 23, 1989, between AFC and the Key Bank of New York, as
Trustee at that time, as supplemented by the supplemental indenture dated August
24, 1992. The indenture and supplemental indenture are filed as exhibits to the
Registration Statement and reference is made thereto for a complete statement of
the terms and provisions of these Certificates.
The Certificates bear interest payable semiannually on January 1 and July 1 of
each year and at maturity at the rates quoted herein. Principal and interest on
the Certificates will be payable at the office of the transfer agent, Agway, in
DeWitt, New York. Additional amounts may be added to the principal of any
Certificate pursuant to an election by the holder thereof to have the semiannual
interest payments added to and increase the principal amount of the Certificate.
The 6.75% Certificates and 7.25% Member Certificates are to be issued in
registered form only in denominations of $100 and multiples thereof. The 7.00%
Certificates and 7.50% Member Certificates are to be issued in registered form
only in denominations of $5,000 and multiples thereof. The 7.75% and 8.00%
Certificates (not eligible for the Company's normal repurchase practice) are to
be issued in registered form only in denominations of $2,000 and multiples
thereof.
The Certificates are unsecured obligations of AFC, and the payment thereof is to
be subordinated to other debt (except debts similarly subordinated) as
hereinafter described. There is no provision in the indentures that would
prevent AFC or Agway from incurring additional debt or which would restrict the
interest rate or other terms of such other debt.
LIMITATIONS ON OWNERSHIP AND TRANSFER. The 7.25% Member Certificates and 7.50%
Member Certificates may be purchased only by members of Agway. The 6.75% and
7.00% Certificates may be sold to the general public and are generally purchased
by non-member patrons of Agway, Agway employees and former employees. The 7.75%
and 8.00% Certificates (not subject to repurchase practice) may be purchased by
both members of Agway and the general public.
Agway, acting as transfer agent, is able to prevent issuing or reissuing a
Member Money Market Certificate to other than holders of the Membership Common
and Honorary Member Preferred Stock.
REDEMPTION PROVISIONS. Upon not less than 30 days' written notice, AFC may, at
its option, redeem all, or by lot, from time to time any part of the
Certificates at the principal amount thereof, together with accrued interest
from the last interest payment date to the date fixed for redemption at the
stated rate. Should the Certificates be redeemed by lot, all Certificates not
redeemed will be accorded equal treatment in any subsequent redemption.
REPURCHASE PRACTICE. While there is no guarantee of repurchase, it is the
present practice of AFC to repurchase at face value, plus interest accrued at
the stated rate, the Certificates of any holder whenever presented for
repurchase. It is the intention of AFC to follow such practice in the future
with respect to all of the Certificates offered in this Prospectus except the
7.75% and 8.00% Certificates, which AFC does not intend to repurchase.
INTEREST REINVESTMENT OPTION. At the time of application for purchase of the
Certificates, or at any time thereafter, the holder may elect to have all
interest paid on the Certificate reinvested automatically. In the event that the
automatic reinvestment option is elected, the interest due on each semiannual
interest payment date will be added to the principal amount of the Certificate
and will earn interest thereafter on the same basis as the original principal
amount. This election may be revoked only as to future interest payments at any
time by written notice to AFC, effective on the date when the revocation notice
is duly received by AFC. Interest reinvested will be subject to federal income
tax as if it had been received by the certificate holder at the time reinvested.
16
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
SUBORDINATION PROVISIONS. The payment of the principal and interest on the
Certificates is subordinated in right of payment, to the extent set forth in the
indenture, to the prior payment in full of all "Senior Debt." Senior Debt is
defined as the principal of, and interest on (a) indebtedness (other than the
indebtedness of AFC with respect to its debentures and Certificates issued under
indentures dated as of October 1, 1974, September 1, 1976, September 1, 1978,
September 1, 1985, September 1, 1986, August 24, 1987, August 23, 1988 and
August 23, 1989 and supplemental indenture dated August 24, 1992) of AFC for
money borrowed from or guaranteed to banks, trust companies, insurance
companies, and other financial institutions, including dealers in commercial
paper, charitable trusts, pension trusts, and other investing organizations,
evidenced by notes or similar obligations, or (b) indebtedness (other than with
respect to the indentures noted in clause (a) above) of AFC evidenced by notes,
debentures or certificates issued under the provisions of an indenture or
similar instrument between AFC and a bank trust company, unless in any case
covered by clause (a) or (b) the instrument creating or evidencing the
indebtedness provides that such indebtedness is not superior or is subordinate
in right of payment to the certificates. Senior Debt, as thus defined, includes
all debt presently outstanding except indebtedness with respect to the
debentures described in clause (a) above. As of August 26, 1998, Senior Debt of
$19,150,000 was outstanding.
In the event of any distribution of assets of AFC under any total liquidation or
reorganization of AFC, the holders of all Senior Debt shall be entitled to
receive payment in full before the holders of the Certificates are entitled to
receive any payment. After payment in full of the Senior Debt, the holders of
the Certificates will be entitled to participate in any distribution of assets,
both as such holders and by virtue of subrogation to the rights of the holders
of Senior Debt, to the extent that the Senior Debt was benefited by the receipt
of distributions to which the holders of the Certificates would have been
entitled if there had been no subordination. By reason of such subordination, in
the event of AFC's insolvency, holders of Senior Debt may receive more, ratably,
and holders of the certificates may receive less, ratably, than other creditors
of AFC. The subordinated debentures and Certificates rank pari passu with each
other.
MODIFICATION OF INDENTURES. The indentures permit modification or amendment
thereof, but no modification of the terms of payment or reduction of the
percentage required for modification will be effective against any certificate
holder without his consent.
EVENTS OF DEFAULT AND WITHHOLDING OF NOTICE THEREOF TO CERTIFICATE HOLDERS. The
indentures provide for the following Events of Default: (i) failure to pay
interest upon any of the Certificates when due, continued for a period of 30
days; (ii) failure to pay principal of the Certificates or Senior Debt when due;
(iii) failure to perform any other covenant of AFC as set forth in the
indentures, continued for 90 days after written notice by the Trustee or the
holders of at least 25% in principal amount of the Certificates then
outstanding.
The Trustee, within 90 days after the occurrence of the default, is to give the
certificate holders notice of all defaults known to Trustee, unless cured prior
to the giving of such notice, provided that, except in the case of default in
the payment of principal or interest on any of the Certificates, the Trustee may
withhold such notice if and so long as it in good faith determines that the
withholding of such notice is in the interest of the certificate holders.
Upon the happening and during the continuance of a default, the Trustee or the
holders of 25% in aggregate principal amount of the Certificates may declare the
principal of all the Certificates and the interest accrued thereon due and
payable, but the holders of a majority of the Certificates may waive all
defaults and rescind such declaration if the default is cured. Subject to the
provisions of the indenture relating to the duties of the Trustee in case any
such default shall have occurred and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers at the request, order or
direction of any of the certificate holders unless they shall have offered to
the Trustee reasonable security or indemnity. Subject to such provisions for
security or indemnity, a majority of the holders of outstanding Certificates
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee.
17
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
GUARANTEE BY AGWAY. If AFC or any of its successors fails punctually to pay any
such principal and interest, Agway has guaranteed to cause any such payment to
be punctually made when and as such payment becomes due and payable, whether at
maturity, upon acceleration or mandatory redemption or otherwise. This guarantee
is full and unconditional, and joint and several. To the extent that Agway has
guaranteed payments due under the Certificates, its failure to make payment
under its guarantee shall constitute an Event of Default under the indenture,
and Certificate holders may proceed against Agway to the same extent, and in the
same manner, as described above under "Events of Default and Withholding Notice
Thereof to Certificate Holders."
THE TRUSTEE. On November 24, 1997, The Chase Manhattan Bank assumed Trustee
responsibilities from Mellon Bank, F.S.B. pursuant to the purchase of the
corporate trust business of Mellon Bank. Prior to the purchase, Mellon Bank,
F.S.B. assumed Trustee responsibilities from Key Bank of New York pursuant to an
Agreement of Resignation, Appointment and Acceptance dated September 3, 1996 by
and among KeyCorp, Key Bank of New York, Agway Financial Corporation and Mellon
Bank. Key Bank of New York was the Trustee under a supplemental indenture dated
as of October 1, 1986, between Key Bank, Agway and AFC, which amends the
indentures between the Key Bank and Agway dated as of October 1, 1974, September
1, 1976, September 1, 1978, September 1, 1985, and September 1, 1986. The
debentures and certificates issued under the October 1, 1974, September 1, 1976,
September 1, 1978, September 1, 1985, September 1, 1986, August 24, 1987, and
August 23, 1988 indentures and the supplemental indenture dated August 24, 1992
rank equally as debt instruments of AFC with the certificates covered by the
indenture dated August 23, 1989 being described herewith.
The indentures contain certain limitations on the right of the Trustee, as a
creditor of AFC, to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as security or otherwise.
AUTHENTICATION AND DELIVERY. The Certificates may be authenticated and delivered
upon the written order of AFC without any further corporate action.
SATISFACTION AND DISCHARGE OF INDENTURES. The indentures may be discharged upon
payment or redemption of all Certificates or upon deposit with the Trustee of
funds sufficient therefor.
EVIDENCE AS TO COMPLIANCE WITH CONDITIONS AND COVENANTS. As evidence of
compliance with the covenants and conditions provided for in the indentures, AFC
is to furnish to the Trustee Officer's Certificates each year stating that such
covenants and conditions have been complied with.
On October 1, 1986, AFC assumed Agway's obligations under the indentures between
the Trustee and Agway. A supplemental indenture was filed as an exhibit to the
Registration Statement No. 33-8676, dated September 11, 1986, and reference is
made thereto for a complete statement of the terms and provisions of such
obligations.
GENERAL. If the Certificate holder has elected to have all interest paid on the
Certificate reinvested automatically, the interest due on each semiannual
interest payment date will be added to the principal amount of the certificate
and will earn interest thereafter on the same basis as the original principal
amount. This election may be revoked - as to future interest payments only - by
written notice to AFC, effective on the date when the revocation notice is duly
received by AFC. Interest reinvested will be subject to federal income tax as if
it had been received by the certificate holder at the time reinvested.
18
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE INTEREST REINVESTMENT OPTION
RATES ON PREVIOUSLY ISSUED CERTIFICATES. The stated rates of interest on
Certificates previously issued by AFC that remain outstanding (and upon which
the interest reinvestment option might be exercised by any holder thereof) are
as follows:
Certificates having minimum face amounts of $100:
Stated Rate Stated Rate
of Interest Due October 31, of Interest Due October 31,
----------- --------------- ----------- ---------------
4.5% 2001 6.0% 2006
5.0% 2001 6.25% 2006
6.5% 2001 6.75% 2006
7.0% 2001 7.25% 2006
7.0% 2002 7.75% 2006
7.5% 2002 7.50% 2007
6.75% 2003 8.00% 2007
7.25% 2003 6.0% 2008
8.0% 2004 6.5% 2008
8.5% 2004 8.5% 2008
7.5% 2005 9.0% 2008
8.0% 2005 6.75% 2013
8.5% 2005 7.25% 2013
5.5% 2006
Interest on these outstanding Certificates is payable semiannually on January 1
and July 1, and at maturity, at the rate per annum for each semiannual period
equal to the greater of (1) the Certificates' "stated rate"; and (2) one-half
percent (.5%) below the "Treasury Bill Rate" (as defined above).
Certificates having minimum face amounts of $5,000:
Stated Rate Stated Rate
of Interest Due October 31, of Interest Due October 31,
----------- --------------- ----------- ---------------
6.5% 1998 9.0% 2001
7.0% 1998 5.5% 2002
8.5% 1998 6.0% 2002
9.0% 1998 7.0% 2003
7.5% 1999 7.5% 3003
8.0% 1999 6.5% 2006
9.0% 2000 7.0% 2006
9.5% 2000 7.5% 2006
4.75% 2001 8.0% 2006
5.25% 2001 7.75% 2007
6.75% 2001 8.25% 2007
7.25% 2001 7.0% 2013
8.5% 2001 7.5% 2013
Interest on these outstanding Certificates is payable semiannually on January 1
and July 1, and at maturity, at the rate per annum for each semiannual period
equal to the greater of (1) the Certificates' "stated rate"; and (2) the
"Treasury Bill Rate" (as defined above).
19
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE INTEREST REINVESTMENT OPTION (CONTINUED)
Certificates having minimum face amounts of $2,000:
Stated Rate of Interest Due October 31,
----------------------- ---------------
8.0% 1998
7.25% 2000
7.75% 2000
8.25% 2001
7.5% 2002
8.0% 2002
8.5% 2003
7.75% 2004
8.0% 2006
Interest on these outstanding Certificates is payable semiannually on January 1
and July 1, and at maturity, at the rate per annum for each semiannual period
equal to the greater of (1) the Certificates' "stated rate"; and (2) the
"Treasury Bill Rate" (as defined above).
20
<PAGE>
LEGAL OPINION
Legal matters in connection with the securities offered hereby have been passed
upon for the Companies by David M. Hayes, Esq., Senior Vice President, General
Counsel and Secretary of Agway. Mr. Hayes is a Director and the General Counsel
of AFC.
EXPERTS
The consolidated balance sheets as of June 30, 1998 and 1997 and the
consolidated statements of income, retained earnings, and cash flows for each of
the three years in the period ended June 30, 1998, incorporated by reference in
this Prospectus, have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
DISTRIBUTION AND REDEMPTION OF SECURITIES OFFERED
Sale of the securities offered hereby will be solicited through direct mailings
and/or personal contact by certain designated employees of Agway. No salesmen
will be employed to solicit the sale of these securities, and no commission or
discount will be paid or allowed to anyone in connection with their sale. The
individual Agway employees who participate in the sale of these securities may
be deemed to be underwriters of this offering within the meaning of that term as
defined in Section 2(11) of the Securities Act of 1933, as amended.
While there is no guarantee of repurchase, the Companies intend to continue
their practice of repurchasing, when presented for redemption, any security
being offered in this Prospectus, other than the 7.75% and 8.00% Certificates
described herein.
ABSENCE OF PUBLIC MARKET, REDEMPTION AND MARKET RISK
There is no market for the debentures and Certificates and there is no intent on
the part of the Companies to create or encourage a trading mechanism for these
debentures and Certificates. The Companies do not intend to apply for listing of
the debentures and Certificates on any securities exchange. Any secondary market
for, and the market value of, the debentures and Certificates will be affected
by a number of factors independent of the creditworthiness of Agway and AFC,
including the level and direction of interest rates, the remaining period to
maturity of the debentures and Certificates, the right of the Companies to
redeem the debentures and Certificates, the aggregate principal amount of the
debentures and Certificates and the availability of comparable investments. In
addition, the market value of the debentures and Certificates may be affected by
numerous other interrelated factors, including factors that affect the U.S.
corporate debt market generally, and Agway and AFC specifically. See the "Risk
Factors" section of this Prospectus set forth on page 4.
21
<PAGE>
AGWAY INC.
AGWAY
FINANCIAL
CORPORATION
(logo)
PROSPECTUS
Until _____, 1998, all dealers
effecting transactions in the
registered securities, whether or
not participating in this
distribution, may be required to
deliver a Prospectus. This is in
addition to the obligations of
dealers to deliver a Prospectus
when acting as underwriters and
with respect to their unsold
allotments or subscriptions.
22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*:
Registration Fee ........................ $ 72,629
Printing and Engraving .................. 25,000
Registration Service and Trustee Expense 32,000
Accounting Fees and Expenses ............ 4,000
"Blue Sky" Fees and Expenses ............ 30,000
Mailing Costs ........................... 7,000
Miscellaneous Expenses .................. 6,071
--------
$176,700
========
*Approximate
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Article 12 of Agway's By-laws and Section 6.4 of AFC's By-laws,
filed by reference to Item 15 of Registration Statement on Form
S-3, File No. 333-34781 dated September 2, 1997.
Section 145 of the Delaware General Corporation Law permits a
corporation to indemnify its officers and directors against
liabilities as provided for in the By-Laws of Agway and AFC. Under
the terms of a Directors and Officers Liability and Corporation
Reimbursement Policy purchased by Agway and AFC, each of the
directors and officers of Agway and AFC is insured against loss
arising from any claim or claims which may be made during the
policy period by reason of any wrongful act (as defined in the
policy) in their capacities as directors or officers. In addition,
Agway and AFC are insured against loss arising from any claim or
claims which may be made during the policy period against any
director or officer of Agway and AFC by reason of any wrongful act
(as defined in the policy) in their capacities as directors or
officers, but only when the directors or officers shall have been
entitled to indemnification by Agway and AFC.
23
<PAGE>
ITEM 16. EXHIBITS:
(A) EXHIBITS:
4(a)- The Indenture dated as of October 1, 1974 between
Agway Inc. and First Trust and Deposit Company of
Syracuse, New York, Trustee, including forms of
Subordinated Debentures (Minimum 8% per annum) due
July 1, 1999, and Subordinated Debentures (Minimum
8.5% per annum) due July 1, 1999, filed by
reference to Exhibit 4 of the Registration
Statement (Form S-7), File No. 2-52179 dated
November 21, 1974.
4(b)- The Indenture dated as of September 1, 1976
between Agway Inc. and First Trust and Deposit
Company of Syracuse, New York, Trustee, including
forms of Subordinated Debentures (Minimum 7% per
annum) due July 1, 2001, and Subordinated
Debentures (Minimum 7.5% per annum) due July 1,
2001, filed by reference to Exhibit 4 of the
Registration Statement (Form S-1), File No.
2-57227, dated September 21, 1976.
4(c)- The Indenture dated as of September 1, 1978
between Agway Inc. and First Trust and Deposit
Company of Syracuse, New York, Trustee, including
forms of Subordinated Debentures (Minimum 7.5% per
annum) due July 1, 2003, and Subordinated
Debentures (Minimum 8% per annum) due July 1, 2003,
filed by reference to Exhibit 4 of the Registration
Statement (Form S-1), File No. 2-62549 dated
September 8, 1978.
4(d)- The Indenture dated as of September 1, 1985
between Agway and Key Bank of Central New York of
Syracuse, New York, Trustee, including forms of
Subordinated Money Market Certificates (Minimum
7.5% per annum) due October 31, 2005, and
Subordinated Member Money Market Certificates
(Minimum 8% per annum) due October 31, 2005, filed
by reference to Exhibit 4 of the Registration
Statement (Form S-2), File No. 2-99905, dated
August 27, 1985.
4(e)- The Indenture dated as of September 1, 1986
between AFC and Key Bank of Central New York of
Syracuse, New York, Trustee, including forms of
Subordinated Member Money Market Certificates
(Minimum 6% per annum) due October 31, 2006, and
Subordinated Money Market Certificates (Minimum
5.5% per annum) due October 31, 2006, filed by
reference to Exhibit 4 of the Registration
Statement (Form S-3), File No. 33-8676, dated
September 11, 1986.
4(f)- The Supplemental Indenture dated as of October 1,
1986 among AFC, Agway Inc. and Key Bank of Central
New York of Syracuse, New York, Trustee, including
forms of subordinated debt securities filed by
reference to Exhibit 4 of the Registration
Statement (Form S-3), File No. 33-8676, dated
September 11, 1986.
4(g) - The Indenture dated as of August 24, 1987 between
AFC and Key Bank of Central New York of Syracuse,
New York, Trustee, including forms of Subordinated
Member Money Market Certificates (Minimum 7% per
annum) due October 31, 1998, and Subordinated
Member Money Market Certificates (Minimum 6.5% per
annum) due October 31, 2008, and Subordinated Money
Market Certificates (Minimum 6.5% per annum) due
October 31, 1998, and Subordinated Money Market
Certificates (Minimum 6% per annum) due October 31,
2008, filed by reference to Exhibit 4 of the
Registration Statement (Form S-3), File No.
33-16734, dated August 31, 1987.
24
<PAGE>
ITEM 16(A) EXHIBITS- (CONTINUED)
4(h) - The Indenture dated as of August 23, 1988 between
AFC and Key Bank of Central New York of Syracuse,
New York, Trustee, including forms of Subordinated
Member Money Market Certificates (Minimum 9.5% per
annum) due October 31, 2000, and Subordinated
Member Money Market Certificates (Minimum 9% per
annum) due October 31, 2008, and Subordinated Money
Market Certificates (Minimum 9% per annum) due
October 31, 2000, and Subordinated Money Market
Certificates (Minimum 8.5% per annum) due October
31, 2008, filed by reference to Exhibit 4 of the
Registration Statement (Form S-3), File No. 33-
24093, dated August 31, 1988.
4(i)- The Supplemental Indenture dated as of October
14, 1988 among AFC, Agway Inc. and Key Bank of
Central New York, National Association, Trustee,
amending the Indentures dated as of August 23, 1988
and August 24, 1988 filed on October 18, 1988.
4(j)- The Indenture dated as of August 23, 1989, among
AFC, Agway Inc. and Key Bank of Central New York of
Syracuse, New York, Trustee, including forms of
Subordinated Money Market Certificates and
Subordinated Member Money Market Certificates,
filed by reference to Exhibit 4 of the Registration
Statement (Form S-3), File No. 33-30808, dated
August 30, 1989.
4(k)- Agway Board of Directors resolutions authorizing
the issuance of Honorary Member Preferred Stock,
Series HM and Membership Common Stock and
authorizing AFC to issue Money Market Certificates
under Indentures dated as of August 23, 1989, filed
herewith.
4(l)- AFC Board of Directors resolutions authorizing
the issuance of Money Market Certificates under
indentures dated as of August 23, 1989, filed
herewith.
4(m)- The Supplemental Indenture dated as of August 24,
1992 among AFC, Agway Inc. and Key Bank of New
York, Trustee, amending the Indenture dated as of
August 23, 1989 filed by reference to Exhibit 4 of
the Registration Statement (Form S-3), File No.
33-52418, dated September 25, 1992.
4(n)- Agreement of Resignation, Appointment and
Acceptance among KeyCorp, Key Bank of New York, AFC
and Mellon Bank, F.S.B., dated as of September 3,
1996, five agreements, filed by reference to
Exhibit 4(o) of Form S-3, File No. 333-34781, dated
September 2, 1997.
4(o)- Agway Inc. By-laws as amended April 28, 1998, filed
by reference to Exhibit 3 of Annual Report on Form
10-K, dated August 27, 1998.
5 - Opinions of David M. Hayes, Esq., dated August 26,
1998, filed herewith.
12 - Statements regarding computation of ratios, filed
herewith.
23 - Consents of experts and counsel, filed herewith.
25 - Statement of Eligibility and Qualification of
Trustee on Form T-1, filed herewith.
Exhibit numbers 1, 2, 8, 15, 24, 26 through 28 and 99 are
inapplicable and exhibit numbers 3, 6, 7, 9, 10, 11, 13, 14,
and 16 through 22 are not required.
25
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake:
A. 1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
a. To include any Prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
b. To reflect in the Prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected
in the form of prospects filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective registration statement;
c. To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement, including
(but not limited to) any addition or deletion of a
managing underwriter;
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
B. That, for purposes of determining liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be
a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrants pursuant
to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by either of
the registrants of expenses incurred or paid by a director,
officer or controlling person of such registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the questions whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
D. To remove from registration by means of a post-effective
amendment any of the securities which remain unsold at the
termination of the offering.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of DeWitt, State of New York, on August
27, 1998.
AGWAY INC.
(Registrant)
By /s/ Donald P. Cardarelli
------------------------------------
DONALD P. CARDARELLI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Donald P. Cardarelli President and Chief Executive Officer August 27, 1998
- ------------------------------------------------
(DONALD P. CARDARELLI) (Principal Executive Officer)
/s/ Peter J. O'Neill Senior Vice President, August 27, 1998
- ------------------------------------------------
(PETER J. O'NEILL) Finance & Control,
Treasurer and Controller
(Principal Financial Officer
& Principal Accounting Officer)
/s/ Ralph H. Heffner Chairman of the August 27, 1998
- ------------------------------------------------
(RALPH H. HEFFNER) Board and Director
/s/ Gary K. Van Slyke Vice Chairman of the August 27, 1998
- ------------------------------------------------
(GARY K. VAN SLYKE) Board and Director
/s/ Kevin B. Barrett Director August 27, 1998
- ------------------------------------------------
(KEVIN B. BARRETT)
/s/ Keith H. Carlisle Director August 27, 1998
- ------------------------------------------------
(KEITH H. CARLISLE)
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ D. Gilbert Couser Director August 27, 1998
- ------------------------------------------------
(D. GILBERT COUSER)
/s/ Andrew J. Gilbert Director August 27, 1998
- ------------------------------------------------
(ANDREW J. GILBERT)
/s/ Peter D. Hanks Director August 27, 1998
- ------------------------------------------------
(PETER D. HANKS)
/s/ Robert L. Marshman Director August 27, 1998
- --------------------------------------------
(ROBERT L. MARSHMAN)
/s/ Jeffrey B. Martin Director August 27, 1998
- ------------------------------------------------
(JEFFREY B. MARTIN)
/s/ Samuel F. Minor Director August 27, 1998
- ------------------------------------------------
(SAMUEL F. MINOR)
/s/ Carl D. Smith Director August 27, 1998
- ------------------------------------------------
(CARL D. SMITH)
/s/ Thomas E. Smith Director August 27, 1998
- ------------------------------------------------
(THOMAS E. SMITH)
/s/ Joel L. Wenger Director August 27, 1998
- ------------------------------------------------
(JOEL L. WENGER)
/s/ Edwin C. Whitehead Director August 27, 1998
- -------------------------------------------
(EDWIN C. WHITEHEAD)
/s/ William W. Young Director August 27, 1998
- ------------------------------------------------
(WILLIAM W. YOUNG)
</TABLE>
28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of DeWitt, State of New York, on August
27, 1998.
AGWAY FINANCIAL CORPORATION
(Registrant)
By /s/ Donald P. Cardarelli
----------------------------------------------
DONALD P. CARDARELLI
CHAIRMAN OF THE BOARD, PRESIDENT, AND DIRECTOR
(PRINCIPAL EXECUTIVE OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Donald P. Cardarelli Chairman of the Board, August 27, 1998
- --------------------------------------------
(DONALD P. CARDARELLI) President and Director
(Principal Executive Officer)
/s/ Peter J. O'Neill Vice President, Treasurer and Director August 27, 1998
- --------------------------------------------
(PETER J. O'NEILL) (Principal Financial Officer and
Principal Accounting Officer)
/s/ David M. Hayes Director August 27, 1998
- --------------------------------------------
(DAVID M. HAYES)
</TABLE>
29
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER
- --------------
4. Instruments defining the rights of security holders
4(k) Agway Board of Directors resolutions authorizing the issuance
of Honorary Member Preferred Stock, Series HM and Membership
Common Stock and authorizing AFC to issue Money Market
Certificates under Indentures dated as of August 23, 1989.
4(l) AFC Board of Directors resolutions authorizing the issuance of
Money Market Certificates under indentures dated as of August
23, 1989.
5. Opinions of David M. Hayes, Esq., dated August 26, 1998
12. Statements regarding computation of ratios
23. Consents of experts and counsel
25. Statement of Eligibility and Qualification of Trustee on Form T-1
EXHIBIT 4
<PAGE>
RESOLUTIONS
-----------
The following resolutions were approved and adopted by the Board of
Directors of AGWAY, INC.:
RESOLVED, That the Company offer for sale to its members, potential
members, other interested parties, and to the Trustee of the Agway, Inc.
Employees Thrift Investment Plan, the following securities at the prices
indicated:
TITLE AMOUNT PRICE
- ----- ------ -----
Preferred Stock, Series B $100 par value 10,000 $ 100
shares
Honorary Member Preferred Stock 4,000 $ 25
$25 par value shares
Common Stock $25 par value 4,000 $ 25
shares
pursuant to the By-Laws of the Company through designated employees, provided
that no commission or other remuneration shall be paid to any person with
respect to the sale of such securities; and be it
FURTHER RESOLVED, That the Company approves Agway Financial Corporation, a
wholly-owned subsidiary, offering for sale to Agway members, other interested
parties, and to the Trustee of the Agway, Inc. Employees Thrift Investment Plan,
the following securities at the prices indicated:
Subordinated Money Market Certificates $70,000,000 100%
due October 31, 2013 (Minimum 7.50% per
annum; Member; denomination of $5,000)
Subordinated Money Market Certificates $126,000,000 100%
due October 31, 2013 (Minimum 7.00% per
annum; General; denomination of $5,000)
Subordinated Money Market Certificates $10,000,000 100%
due October 31, 2013 (Minimum 7.25% per
annum; Member; denomination of $100)
Subordinated Money Market Certificates $10,000,000 100%
due October 31, 2013 (Minimum 6.75% per
annum; General; denomination of $100)
<PAGE>
-2-
Subordinated Money Market Certificates $65,000,000 100%
due October 31, 2006 (Minimum 8.00% per
annum; General; denomination of $2,000)
Subordinated Money Market Certificates $43,000,000 100%
due October 31, 2004 (Minimum 7.75% per
annum; General; denomination of $2,000)
; and be it
FURTHER RESOLVED, That the Company approves Agway Financial Corporation, a
wholly-owned subsidiary, offering for sale to Agway members, other interested
parties, and to the Trustee of the Agway, Inc. Employees Thrift Investment Plan,
the following securities registered under the reinvestment option:
Subordinated Money Market Certificates $47,000,000 100%
(due from October 31, 1998 through
October 31, 2013; minimum 4.5% to 9.5%
per annum)
; and be it
FURTHER RESOLVED, That the Agway Financial Corporation (AFC) Board of
Directors is hereby authorized to revise the minimum interest rate on
certificates of any class or series to be issued. In the event that the minimum
interest rate is so revised, an officer's certificate with a copy of the
resolution of the AFC Board certified by the President or any Vice President and
by the Treasurer, the Secretary or any Assistant Treasurer or Assistant
Secretary shall be delivered to the Trustee under the Indenture for such
certificate. A prospectus supplement may be filed with the Securities and
Exchange Commission and a copy of the resolution may be filed; and be it
FURTHER RESOLVED, That the appropriate officers and employees of the
Company with the assistance of its accountants and attorneys be, and they hereby
are, authorized and directed to prepare, execute and file with the Securities
and Exchange Commission on behalf of the Company Registration Statements
including any and all documents and exhibits related thereto for registration
under the Securities Act of 1933 of the Common Stock and Preferred Stock as well
as any and all amendments to said Registration Statements in such form as the
officers executing same on advice of counsel may deem necessary and appropriate
so as to secure and maintain the effectiveness of said Registration Statements;
and be it
<PAGE>
-3-
FURTHER RESOLVED, That David M. Hayes, Esq., Senior Vice President, General
Counsel and Secretary of the Company, Nels G. Magnuson, Esq., Associate General
Counsel and Assistant Secretary of the Company and Theresa A. Szuba, Esq.,
Assistant General Counsel and Assistant Secretary of the Company, be, and they
hereby are, each of them appointed and designated as persons duly authorized to
receive communications and notices from the Securities and Exchange Commission
with respect to the aforesaid Registration Statements; and be it
FURTHER RESOLVED, That the Common Stock and Preferred Stock when issued and
sold for cash as provided here and above shall be fully paid and nonassessable;
and be it
FURTHER RESOLVED, That the President or any Vice President, the Secretary
or any Assistant Secretary, and the Treasurer of this Company be, and each of
them hereby is, authorized to take, on behalf of and in the name of this
Company, any and all actions, which, in the judgment of the officer taking the
action, is necessary, useful or appropriate in order to render Common Stock or
Preferred Stock of this Company, to be issued and sold pursuant to resolutions
adopted by this Board at this meeting, to be eligible for offering and sale
within or from any state of the United States under the securities regulation
laws of such state, and to qualify the Company as a securities dealer under any
such laws, including, but without limiting the generality of the foregoing,
making or filing applications for any and all licenses, permits, orders or other
approvals or clearances under such laws, and in that connection, executing and
filing any and all documents, including but without limiting the generality of
the foregoing, consents to service of process and appointment of agents to
accept service of process on behalf of this Company with respect to any matter
as to which such consent or appointment may be required by such securities laws
and making such agreements, covenants and undertakings as may be necessary,
useful or appropriate, and all such consents, appointments, agreements,
covenants and undertakings heretofore or hereinafter given or entered into
pursuant to the authority of this resolution shall be binding upon this Company
with the same effect as though set forth in full herein and expressly authorized
hereby.
I, Donna B. Flett, Assistant Secretary of AGWAY, INC., hereby certify that
the foregoing is a true and complete copy of the resolutions approved and
adopted by the Board of Directors of this Corporation at a meeting held on the
17th day
<PAGE>
-4-
of August, 1998, at which a quorum was present and more than a majority of the
Directors voted in the affirmative. The foregoing resolutions have not been
amended, modified, rescinded revoked or terminated.
WITNESS my signature and seal of this Corporation this 21st day of August,
1998.
/s/ Donna B. Flett
Donna B. Flett
Assistant Secretary
<PAGE>
RESOLUTIONS
-----------
The following resolutions were approved and adopted by the
Board of Directors of AGWAY FINANCIAL CORPORATION:
RESOLVED, That Agway Financial Corporation offer for sale to
Agway, Inc. members, other interested parties, and to the Trustee of the Agway,
Inc. Employees Thrift Investment Plan, the following securities at the prices
indicated:
Subordinated Money Market Certificates $ 70,000,000
100% due October 31, 2013 (Minimum 7.50% per
annum; Member; denomination of $5,000)
Subordinated Money Market Certificates $126,000,000
100% due October 31, 2013 (Minimum 7.00% per
annum; General; denomination of $5,000)
Subordinated Money Market Certificates $ 10,000,000
100% due October 31, 2013 (Minimum 7.25% per
annum; Member; denomination of $100)
Subordinated Money Market Certificates $ 10,000,000
100% due October 31, 2013 (Minimum 6.75% per
annum; General; denomination of $100)
Subordinated Money Market Certificates $ 65,000,000
100% due October 31, 2006 (Minimum 8.00% per
annum; General; denomination of $2,000)
Subordinated Money Market Certificates $ 43,000,000
100% due October 31, 2004 (Minimum 7.75% per
annum; General; denomination of $2,000)
; and be it
FURTHER RESOLVED, That Agway Financial Corporation offer for
sale to Agway members, other interested parties, and to the Trustee of the
Agway, Inc. Employees Thrift Investment Plan, the following securities
registered under the reinvestment option:
Subordinated Money Market Certificates $ 47,000,000
100% (due from October 31, 1998 through
October 31, 2013; minimum 4.5% to 9.5%
per annum)
; and be it
<PAGE>
-2-
FURTHER RESOLVED, That the Agway Financial Corporation (AFC)
Board of Directors is hereby authorized to revise the minimum interest rate on
certificates of any class or series to be issued. In the event that the minimum
interest rate is so revised, an officer's certificate with a copy of the
resolution of the AFC Board certified by the President or any Vice President and
by the Treasurer, the Secretary or any Assistant Treasurer or Assistant
Secretary shall be delivered to the Trustee under the Indenture for such
certificate. A prospectus supplement may be filed with the Securities and
Exchange Commission and a copy of the resolution may be filed; and be it
FURTHER RESOLVED, That the appropriate officers and employees
of the Company with the assistance of its accountants and attorneys be, and they
hereby are, authorized and directed to prepare, execute and file with the
Securities and Exchange Commission on behalf of the Company Registration
Statements including any and all documents and exhibits related thereto for
registration under the Securities Act of 1933 of the debt securities as well as
any and all amendments to said Registration Statements in such form as the
officers executing same on advice of counsel may deem necessary and appropriate
so as to secure and maintain the effectiveness of said Registration Statements;
and be it
FURTHER RESOLVED, That David M. Hayes, Esq., Nels G.
Magnuson, Esq., and Theresa A. Szuba, Esq., be, and they hereby are, each of
them appointed and designated as persons duly authorized to receive
communications and notices from the Securities and Exchange Commission with
respect to the aforesaid Registration Statements; and be it
FURTHER RESOLVED, That the Subordinated Money Market
Certificates, the sale of which has been authorized here and above, shall be
issued and sold pursuant to and subject to the Trust Indentures dated September
1, 1985 and September 1, 1986, Supplemental Indenture dated October 1, 1986,
Indentures dated August 24, 1987 and August 23, 1988, Supplemental Indenture
dated October 14, 1988, Indenture dated August 23, 1989, and Supplemental
Indenture dated August 24, 1992, with Key Bank of New York, N.A., Albany, New
York as Trustee and its successors thereto (the current Trustee is The Chase
Manhattan Bank), and that said certificates when issued for cash or issued
pursuant to the interest reinvestment program as provided here and above, shall
be binding obligations of the Company; and be it
FURTHER RESOLVED, That the President or any Vice President,
the Secretary or any Assistant Secretary, and the Treasurer of this Company be,
and each of them hereby is, authorized to take, on behalf of and in the name of
this Company, any and all actions, which, in the judgment of the officer taking
<PAGE>
-3-
the action, is necessary, useful or appropriate in order to render debt
securities of this Company, to be issued and sold pursuant to resolutions
adopted by this Board, to be eligible for offering and sale within or from any
state of the United States under the securities regulation laws of such state,
and to qualify the Company as a securities dealer under any such laws,
including, but without limiting the generality of the foregoing, making or
filing applications for any and all licenses, permits, orders or other approvals
or clearances under such laws, and in that connection, executing and filing any
and all documents, including but without limiting the generality of the
foregoing, consents to service of process and appointment of agents to accept
service of process on behalf of this Company with respect to any matter as to
which such consent or appointment may be required by such securities laws and
making such agreements, covenants and undertakings as may be necessary, useful
or appropriate, and all such consents, appointments, agreements, covenants and
undertakings heretofore or hereinafter given or entered into pursuant to the
authority of this resolution shall be binding upon this Company with the same
effect as though set forth in full herein and expressly authorized hereby.
I, Donna B. Flett, Secretary of AGWAY FINANCIAL CORPORATION,
hereby certify that the foregoing is a true and complete copy of the resolutions
duly approved and duly adopted by unanimous written consent of the Directors of
this Corporation as of the 17th day of August, 1998. The foregoing resolutions
have not been amended, modified, rescinded, revoked or terminated.
WITNESS my signature and seal of this Corporation this 25th
day of August, 1998.
/s/ Donna B. Flett
Secretary
EXHIBIT 5
<PAGE>
(logo)
AGWAY INC., PO BOX 4933, SYRACUSE, NEW YORK 13221-4933
August 26, 1998
Agway Inc.
333 Butternut Drive
DeWitt, NY 13214
Gentlemen:
As General Counsel of Agway Inc., I am acting as your legal counsel in
connection with the registration of 10,000 shares ($100 par value) of 8%
Cumulative Preferred Stock, Series B, 4,000 shares ($25 par value) of Series HM
Preferred Stock and 4,000 shares ($25 par value) of Membership Common Stock
(hereinafter referred to as the "Equity Securities"), being registered with the
Securities and Exchange Commission on Form S-3. I am familiar with the relevant
documents and materials used in preparing such registration.
Based upon my review of the relevant documents and materials, it is my
opinion that:
(a) Agway Inc. is a valid and subsisting Delaware corporation;
(b) The Equity Securities being registered with the Securities
and Exchange Commission on Form S-3 will, when sold, be
legally issued, fully paid and non-assessable (except as
may be limited by bankruptcy, insolvency, reorganization,
or other laws of general applicability relating to or
affecting creditors' rights or by general equity
principles) so long as (i) the Registration Statement
remains effective under the Securities Act of 1933, as
amended, and (ii) the Equity Securities shall have been
duly executed and shall have been duly delivered to the
purchasers thereof against payment of the agreed
consideration therefor.
(c) The matters of law and legal conclusions set forth under
"Description of 8% Cumulative Preferred Stock, Series B",
"Description of Honorary Member Preferred Stock, Series
HM", and "Description of Membership Common Stock" in the
Prospectus filed as a part of said registration are
correct.
This letter is written to be used as an exhibit in the filing of the
Registration Statement, and I hereby consent to the reference to my name under
the caption "LEGAL OPINION" in the Prospectus.
Very truly yours,
/s/ David M. Hayes
David M. Hayes
Senior Vice President
General Counsel
AGWAY INC.
DMH/cms
333 BUTTERNUT DRIVE, DEWITT, NEW YORK 13214
<PAGE>
(logo)
AGWAY FINANCIAL CORPORATION, PO BOX 8985, WILMINGTON, DE 19899
302-654-8371
August 26, 1998
Agway Financial Corporation
Suite 1300
1105 North Market Street
Wilmington, Delaware 19801
Gentlemen:
As General Counsel of Agway Financial Corporation ("AFC"), I am acting
as your legal counsel in connection with the registration of $200,000,000 in
principal amount of Subordinated Member Money Market Certificates and
Subordinated Money Market Certificates and $45,000,000 in principal amount of
Money Market Certificates, member and general, under the interest reinvestment
option (hereinafter referred to as the "Debt Securities"), being registered with
the Securities and Exchange Commission on Form S-3. I am familiar with the
relevant documents and materials used in preparing such registration.
Based upon my review of the relevant documents and materials, it is my
opinion that:
(a) AFC is a valid and subsisting Delaware corporation;
(b) The Debt Securities being registered with the Securities
and Exchange Commission on Form S-3 will, when sold, be
legally issued and binding obligations of Agway Financial
Corporation (except as may be limited by bankruptcy,
insolvency, reorganization, or other laws of general
applicability relating to or affecting creditors' rights
or by general equity principles) so long as (i) the
Registration Statement remains effective under the
Securities Act of 1933, as amended, and the Indentures
continue to qualify under the Trust Indenture Act of 1939,
as amended, and (ii) the Debt Securities shall have been
duly executed and authenticated as provided in the
Indentures, and shall have been duly delivered to the
purchasers thereof against payment of the agreed
consideration therefor.
(c) The matters of law and legal conclusions set forth under
"Description of the Certificates" in the Prospectus filed
as a part of said registration are correct.
This letter is written to be used as an exhibit in the filing of the
Registration Statement, and I hereby consent to the reference to my name under
the caption "LEGAL OPINION" in the Prospectus.
Very truly yours,
/s/ David M. Hayes
David M. Hayes
General Counsel
AGWAY FINANCIAL CORPORATION
DMH/cms
1105 N. MARKET ST., SUITE 1300, WILMINGTON, DE 19801
EXHIBIT 12
<PAGE>
COMPUTATION OF RATIO OF MARGINS TO FIXED CHARGES AND PREFERRED DIVIDENDS
COMBINED
<TABLE>
<CAPTION>
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
FOR THE YEARS ENDED JUNE 30,
(THOUSANDS OF DOLLARS)
----------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Margins before income taxes and
member refunds............................. $ 25,203 $ 16,583 $ 21,070 $ (6,053) $ 4,833
Fixed charges - Interest................... 67,728 64,432 63,721 56,507 49,849
- Rentals.................... 4,651 3,772 3,004 2,789 2,298
----------- ---------- ----------- ---------- ----------
Total fixed charges........................ 72,379 68,204 66,725 59,296 52,147
----------- ---------- ----------- ---------- ----------
Adjusted net margins....................... $ 97,582 $ 84,787 $ 87,795 $ 53,243 $ 56,980
=========== ========== =========== ========== ==========
Ratio of adjusted net margins to total
fixed charges.............................. 1.3 1.2 1.3 (a) 1.1
=========== ========== =========== ========== ==========
Deficiency of adjusted net margins to
total fixed charges........................ N/D N/D N/D $ 6,053 N/D
=========== ========== =========== ========== ==========
Fixed charges and preferred dividends
combined:
Preferred dividend factor:
Preferred dividend requirements......... $ 3,522 $ 4,115 $ 4,255 $ 4,654 $ 4,909
Ratio of pre-tax margins to
after-tax margins*...................... 50.8% 64.3% 52.9% 71.1% 13.5%
Preferred dividend factor on
pre-tax basis........................... 6,933 6,400 8,043 6,546 36,363
Total fixed charges (above)................ 72,379 68,204 66,725 59,296 52,147
----------- ---------- ----------- ---------- ----------
Fixed charges and preferred dividends
combined................................... $ 79,312 $ 74,604 $ 74,768 $ 65,842 $ 88,510
=========== ========== =========== ========== ==========
Ratio of adjusted net margins to fixed
charges and preferred dividends
combined**................................. 1.2 1.1 1.2 (b) (b)
=========== ========== =========== ========== ==========
Deficiency of adjusted net margins to
fixed charges and preferred dividends
combined................................... N/D N/D N/D $ 12,599 $ 31,530
=========== ========== =========== ========== ==========
</TABLE>
* Represents pre-tax adjusted net margin from continuing operations
divided by after-tax margin, which adjusts dividends on preferred stock
to a pre-tax basis.
** Represents adjusted net margin divided by fixed charges and preferred
dividends combined.
N/D No deficiency.
(a) Adjusted net margins are inadequate to cover total fixed charges.
(b) Adjusted net margins are inadequate to cover total fixed charges
and preferred dividends combined.
<PAGE>
COMPUTATION OF RATIO OF MARGINS TO FIXED CHARGES AND PREFERRED DIVIDENDS
COMBINED
<TABLE>
<CAPTION>
AGWAY INC. (PARENT)
FOR THE YEARS ENDED JUNE 30 PRO FORMA
(THOUSANDS OF DOLLARS) JUNE 1998
--------------------------------------------------------- ----------------------
1998 1997 1996 1995 1994 ADJMTS ADJUSTED
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Margins before income taxes and
member refunds ............................ $ 19,819 $ 3,535 $ 24,106 $ 4,600 $(17,330) $ (1,894)(c) $ 17,925
Fixed charges - Interest .................. 7,174 6,792 7,156 5,874 14,985 1,894(c) 9,068
- Rentals ..................... 2,375 2,074 1,506 1,960 1,183 0 2,375
-------- -------- -------- -------- -------- -------- --------
Total fixed charges ....................... 9,549 8,866 8,662 7,834 16,168 1,894 11,443
-------- -------- -------- -------- -------- -------- --------
Adjusted net margins ...................... $ 29,368 $ 12,401 $ 32,768 $ 12,434 $ (1,162) $ 0 $ 29,368
======== ======== ======== ======== ======== ======== ========
Ratio of adjusted net margins to total
fixed charges ............................. 3.1 1.4 3.8 1.6 (a) 2.57
======== ======== ======== ======== ======== ========
Deficiency of adjusted net margins to
total fixed charges ....................... N/D N/D N/D N/D $ 17,330 N/D
======== ======== ======== ======== ======== ========
Fixed charges and preferred dividends
combined:
Preferred dividend factor:
Preferred dividend requirements ........ $ 3,522 $ 4,115 $ 4,255 $ 4,654 $ 4,909 $ (84)(d) $ 3,438
Ratio of pre-tax margin to
after-tax margins* ..................... 133.1% 323.6% 90.9% (291.2%) 214.5% 133.1% 133.1%
Preferred dividend factor on
pre-tax basis .......................... 2,646 1,272 4,681 (1,598) 2,289 (63) 2,583
Total fixed charges (above) ............... 9,549 8,866 8,662 7,834 16,168 1,894 11,443
-------- -------- -------- -------- -------- --------
Fixed charges and preferred dividends
combined .................................. $ 12,195 $ 10,138 $ 13,343 $ 6,236 $ 18,457 $ 1,831 $ 14,026
======== ======== ======== ======== ======== ======== ========
Ratio of adjusted net margins to fixed
charges and preferred dividends
combined** ................................ 2.4 1.2 2.5 2.0 (b) 2.09
======== ======== ======== ======== ======== ========
Deficiency of adjusted net margins to
fixed charges and preferred dividends ..... N/D N/D N/D N/D $ 19,619 N/D
======== ======== ======== ======== ======== ========
</TABLE>
* Represents pre-tax adjusted net margin from continuing operations
divided by after-tax margin, which adjusts dividends on preferred stock
to a pre-tax basis.
** Represents adjusted net margin divided by fixed charges and preferred
dividends combined.
N/D No deficiency.
(a) Adjusted net margins are inadequate to cover total fixed charges.
(b) Adjusted net margins are inadequate to cover total fixed charges
and preferred dividends combined.
(c) Represents change in annual interest. Calculated by adding interest on
certificates and debentures offered hereby and subtracting interest on
debentures redeemed and long-term debt (see "Use of Proceeds" section
of Prospectus). Calculation as follows (in 000's):
<TABLE>
<CAPTION>
Debt Offered: Amount (000) Rate Extended
------------- ---- ------------
<S> <C> <C> <C>
Money Market Certificates $ 30,000 x 7.00% = $ 2,100
80,000 x 7.50% = 6,000
40,000 x 7.75% = 3,100
50,000 x 8.00% = 4,000
Reinvestment Option 45,000 x (e) = 3,285
------------- ------------
$ 245,000 $ 18,486
============= ============
Less: Debt Repaid
Debentures $ 1,200 x 8.50% = $ (102)
Certificates 27,047 x 8.00% = (2,164)
6,007 x 8.50% = (511)
1,088 x 7.00% = (76)
291 x 6.50% = (19)
41,156 x 9.00% = (3,704)
22,811 x 9.50% = (2,167)
142,723 x 5.50% = (7,850)
------------- -------------
$ 242,323 $ (16,592)
============= =============
</TABLE>
(d) Represents the change in preferred stock dividend requirements as a
result of the current offering [$12 ($200 x 6%) + 80 ($1,000 x 8%)]
less anticipated redemptions of $(180), ($2,500 x 7.21%, the weighted
average rate paid on preferred stock during the year ended June 30,
1998).
(e) Various rates ranging from 4.5% to 9.5%.
EXHIBIT 23
<PAGE>
CONSENT OF COUNSEL
The consent of David M. Hayes, General Counsel and Secretary of the
Company, is included in his opinions, a copy of which is filed as Exhibit 5.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Agway Inc.:
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report, which includes an explanatory sentence relating to a
change in pension accounting, dated August 21, 1998 on our audit of the
consolidated financial statements and financial statement schedules of Agway
Inc. and Consolidated Subsidiaries as of June 30, 1998 and 1997, and for the
years ended June 30, 1998, 1997, and 1996, appearing in the Annual Report on
Form 10-K (SEC File No. 2-22791) of Agway Inc. and Consolidated Subsidiaries
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
We also consent to the reference to our firm under the caption "Experts" and
"Selected Financial Data" in this Prospectus.
/s/PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Syracuse, New York
August 31, 1998
EXHIBIT 25
<PAGE>
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
--------
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
AGWAY, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 15-0277720
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
333 BUTTERNUT DRIVE
DEWITT, NEW YORK 13214
(Address of principal executive offices) (Zip Code)
----------------------------------------------------------------
Debt Securities
----------------------------------------------------------------
<PAGE>
GENERAL
Item 1.General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7.A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 28th day of August, 1998.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
--------------------
Sheik Wiltshire, Second Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1998, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................... $ 12,037
Interest-bearing balances ........................... 4,054
Securities:
Held to maturity securities ................................. 2,340
Available for sale securities ............................... 50,134
Federal funds sold and securities purchased under
agreements to resell ................................ 24,982
Loans and lease financing receivables:
Loans and leases, net of unearned income .... 127,958
Less: Allowance for loan and lease losses .... 2,797
Less: Allocated transfer risk reserve ........ 0
-------
Loans and leases, net of unearned income,
allowance, and reserve .............................. 125,161
Trading Assets .............................................. 61,820
Premises and fixed assets (including capitalized
leases) ............................................. 2,961
Other real estate owned ..................................... 347
Investments in unconsolidated subsidiaries and
associated companies ................................ 242
Customers' liability to this bank on acceptances
outstanding ......................................... 1,380
Intangible assets ........................................... 1,549
Other assets ................................................ 11,727
--------
TOTAL ASSETS ................................................ $298,734
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ...................................... $ 96,682
Noninterest-bearing ...............................$38,074
Interest-bearing ...................................58,608
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ................................... 72,630
Noninterest-bearing ...............................$ 3,289
Interest-bearing .................................. 69,341
Federal funds purchased and securities sold under agree-
ments to repurchase .............................................. 42,735
Demand notes issued to the U.S. Treasury ......................... 872
Trading liabilities .............................................. 45,545
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less ............ 4,454
With a remaining maturity of more than one year
through three years ............................... 231
With a remaining maturity of more than three years ......... 106
Bank's liability on acceptances executed and outstanding ......... 1,380
Subordinated notes and debentures ................................ 5,708
Other liabilities ................................................ 11,295
TOTAL LIABILITIES ................................................ 281,638
---------
EQUITY CAPITAL
Perpetual preferred stock and related surplus .................... 0
Common stock ..................................................... 1,211
Surplus (exclude all surplus related to preferred stock) ........ 10,291
Undivided profits and capital reserves ........................... 5,579
Net unrealized holding gains (losses)
on available-for-sale securities ................................. (1)
Cumulative foreign currency translation adjustments .............. 16
TOTAL EQUITY CAPITAL ............................................. 17,096
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ............................. $ 298,734
=========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
-------
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
AGWAY FINANCIAL CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 06-1174232
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1105 NORTH MARKET STREET, SUITE 1300
WILMINGTON, DELAWARE 19801
(Address of principal executive offices) (Zip Code)
----------------------------------------------------------
DEBT SECURITIES
----------------------------------------------------------
<PAGE>
GENERAL
Item 1.General Information.
Furnish the following information as to the trustee:
(a)Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New
York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16.List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 28th day of August, 1998.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
-------------------
Sheik Wiltshire, Second Vice President
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1998, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................... $ 12,037
Interest-bearing balances ........................... 4,054
Securities:
Held to maturity securities ................................. 2,340
Available for sale securities ............................... 50,134
Federal funds sold and securities purchased under
agreements to resell ................................ 24,982
Loans and lease financing receivables:
Loans and leases, net of unearned income .... 127,958
Less: Allowance for loan and lease losses .... 2,797
Less: Allocated transfer risk reserve ........ 0
-------
Loans and leases, net of unearned income,
allowance, and reserve .............................. 125,161
Trading Assets .............................................. 61,820
Premises and fixed assets (including capitalized
leases) ............................................. 2,961
Other real estate owned ..................................... 347
Investments in unconsolidated subsidiaries and
associated companies ................................ 242
Customers' liability to this bank on acceptances
outstanding ......................................... 1,380
Intangible assets ........................................... 1,549
Other assets ................................................ 11,727
--------
TOTAL ASSETS ................................................ $298,734
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ...................................... $ 96,682
Noninterest-bearing ...............................$38,074
Interest-bearing ...................................58,608
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ................................... 72,630
Noninterest-bearing ...............................$ 3,289
Interest-bearing .................................. 69,341
Federal funds purchased and securities sold under agree-
ments to repurchase .............................................. 42,735
Demand notes issued to the U.S. Treasury ......................... 872
Trading liabilities .............................................. 45,545
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less ............ 4,454
With a remaining maturity of more than one year
through three years ............................... 231
With a remaining maturity of more than three years ......... 106
Bank's liability on acceptances executed and outstanding ......... 1,380
Subordinated notes and debentures ................................ 5,708
Other liabilities ................................................ 11,295
TOTAL LIABILITIES ................................................ 281,638
---------
EQUITY CAPITAL
Perpetual preferred stock and related surplus .................... 0
Common stock ..................................................... 1,211
Surplus (exclude all surplus related to preferred stock) ........ 10,291
Undivided profits and capital reserves ........................... 5,579
Net unrealized holding gains (losses)
on available-for-sale securities ................................. (1)
Cumulative foreign currency translation adjustments .............. 16
TOTAL EQUITY CAPITAL ............................................. 17,096
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ............................. $ 298,734
=========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
